Oil pricing agency S&P Global Platts on Tuesday said it expects crude oil to trade around $70 per barrel by the fourth quarter.
In an interview with CNBC-TV18's Manisha Gupta, Paul Hickin, associate director of oil, said, "The market is tight, the crude stocks are coming down quite significantly in the US and that is a big barometer for oil prices and where they are going. However, at the same time, there is a lot of oil still sloshing around and China holds a lot in reserves. OPEC + has a significant amount of spare capacity especially in Saudi Arabia and Russia. Just a couple of months ago we had OPEC talking about producing more. They meet monthly and they must be itching to address the issue if prices continue to go further."
Hickin said, "There is a lot of volatility in the market. But you have to take a little bit of context of how high the prices go until you see action from OPEC+. The reason OPEC is moving to monthly meetings is to react and adapt to short term volatility in the market."
David Lennox, analyst of Fat Prophets said, "We are looking at over 100 million barrels per day of oil demand going through into 2022. We do expect that the global economy will be a little more normalised as COVID-19 tends to recede towards the background. Once that happens and we do get a reasonably well-vaccinated world, we are then going to see the obligations of travel worldwide rather than just state-wide. So that is going to add another dimension to the demand for energy."
"We got a price target at the moment of between $70-75 per barrel for Brent. So it has broken through the top end of our price but there is still a lot of latent supply that hasn't come back on stream. Even in the US, there is well over a million barrels that can come back. So once we see the prices probably move towards $90 per barrel, we think that is when we are going to see a lot of latent production coming back on stream," Lennox said.
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