WTI Crude Oil Rises – Crude Output Recovery Delay, Improved Demand Outlook Support
Arslan Butt • 1 min read
WTI crude oil prices have risen sharply in early trading on Tuesday over concerns that crude production across Texas would resume at a slow pace after the deep freeze that brought down crude output significantly across the world’s largest energy consumer. At the time of writing, WTI crude oil is trading at around $62.64 per barrel.
According to latest reports, it could take around two weeks for shale oil production in the region to return to normal levels of operation. The unusually cold weather caused shale output to decline by 2 million bpd on account of the frozen pipes and interrupted power supply.
In addition to worries about tighter supply over the next few sessions, crude oil prices are also enjoying support from Goldman Sachs revising oil forecasts higher by $10 for Q2 and Q3 this year. According to its latest estimates, UK Brent oil could touch an average of $70 per barrel by Q2 and $75 per barrel by Q3, up from its previous forecast of $60 and $65 per barrel respectively.
Morgan Stanley also expects crude oil prices to pick up to around $70 per barrel by Q3 2020 over expectations of improvement in demand. The global oil demand is expected to rebound later this year on the back of successful vaccine rollouts around the world, which could bring down the number of infections and keep governments from imposing more lockdowns.