Oil Price Forecasts are firming up - Mar 9

[dan_s]

The price of oil rarely goes up or down in a straight line. This week's pullback was expected and it is healthy to build a support level. Demand for refined products exceeds supply and draining inventories will push prices higher, just not today. Comments from others below. - Dan
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$70 oil could slow demand. While the unexpected rollover of the OPEC+ production cuts sent Brent Crude prices up to $70 a barrel, the highest oil prices in more than a year could dampen global oil demand recovery, which the OPEC+ group itself still sees as fragile.

Vitol: “OPEC+ is in control.” One of the world’s top oil traders says that OPEC+ decision-making is the key factor driving the oil market this year. “The market is telling us that OPEC+ have control,” Mike Muller, Vitol’s head of Asia, said Sunday in an online forum hosted by consultant Gulf Intelligence. “We’re going to get a stock-draw that is going to accelerate through the second quarter and that’s why the market is doing what it’s doing.”

OPEC+ leans towards over-tightening. The surprise OPEC+ extension signals an “overtightening of the market is likely, and is only likely to be corrected after a significant lag,” Standard Chartered said in a note. The investment bank hiked its oil price forecast by $14, with Brent averaging $66 per barrel this year. But higher prices hit 2022 demand, and the bank sees Brent averaging $59.

Refiners’ fortunes rebound. Seven of 18 refineries affected by the Texas grid crisis -- making up over 2 million barrels a day of crude processing capacity -- were operating normally as of Monday. U.S. sour crudes have seen margins shoot up as OPEC+ extended cuts and demand globally looks healthy.