Revising our oil price forecasts – brace for an “overshoot” to mid-70s by the summer: The MUFG Global Markets Podcast

MUFG’s oil price conviction is emphatically shifting more bullish than previous above consensus – and market forwards – forecasts. A confluence of vaccine optimism, an easing of COVID-19 cases and fatalities, greater US stimulus, a more upbeat IMF assessment of the global recovery, stern OPEC+ discipline, US supply outages, Biden’s early bullish energy actions and prospects of a weaker US dollar are powering oil markets forward.

Ehsan Khoman, Head of Emerging Markets Research (EMEA), elaborates on MUFG’s price thesis which now signals a peak summer loaded bell curve profile with Brent crude “overshooting” in Q2 at USD77/b.

Following this, he expects a regression back, ending the year at USD64/b, as markets gradually revert towards the equilibrium price for the oil industry – which he believes is centred on the current anchor near the long-term marginal cost of production and support of ~USD55-60/b for Brent crude.

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