(Reuters) – UBS raised its forecast for Brent oil prices to $ 60 a barrel by mid-year, following Saudi Arabia’s unilateral production cut and a sharp recovery in second-quarter demand for vaccine distribution and more travel.
With Saudi Arabia’s move, OPEC’s production increase of 0.5 million barrels per day (bpd) for January has been reversed in its entirety, resulting in a tighter oil market in the first half of the year, analysts wrote at Swiss bank in a pound.
The world’s largest oil exporter on Wednesday promised further voluntary oil production cuts of one million (bpd) in February and March, pushing Brent prices to a record high since February.
“The UK’s mobile movement reflects our desire to protect prices and support the oil market amid demand concerns as a result of extended movement restrictions in Europe,” UBS said.
“But if demand falls to a lesser extent, the Saudi move would also help speed up the process of accelerating oil investments.”
Brent crude traded around $ 54.59 a barrel before 0802 GMT on Thursday, while US West Texas Intermediate (WTI) rose to $ 51.02. [O/R]
The bank expects Brent to trade at $ 63 per barrel in the second half of 2021 and WTI trades at a $ 3 per barrel discount to Brent prices.
Reporting with Nakul Iyer and Swati Verma in Bengaluru; edited by Uttaresh.V