Oil prices outlook

Key takeaways:

– The summer traveling season is expected to translate into higher demand for oil, namely in the US, which will put an upward pressure on prices.  However, the American consumer remains cautious as the cash handouts received during the COVID-19 pandemic have dried up. In China, a main player when it comes to oil demand, the economy continues to suffer from lingering structural problems which in turn limits the growth potential for oil demand.

– For the first time since 2022, at its June 2024 meeting, OPEC+ announced that more barrels will gradually come to the market as of the fourth quarter of this year, sending a bearish signal to oil prices.

– OPEC has been the most bullish on global demand growth compared to other market observers.

– Given that there hasn’t been any major oil supply disruptions amid the geopolitical developments in Ukraine and Gaza and unless we see a major escalation, the market has already factored in that geopolitical risk. Besides, spare capacity is at comfortable levels.

– All oil price forecasts should be taken with a big pinch of salt. While our understanding of the factors that shape prices has improved significantly in recent years, predicting those factors remains a major uncertain undertaking.