The US-based international investment and banking firm Morgan Stanley said Tuesday that it has raised its Brent crude oil price forecast for the end of 2020 to $40 per barrel from $35 a barrel.
The firm said in a statement that it expects global oil demand will rebound in the fourth quarter of this year as world economies come out of lockdown measures against the novel coronavirus (COVID-19).
It said the rebalancing in the global oil market has begun due to supply cuts by the 23-member oil-producing countries dubbed as OPEC+, which started to lower their collective output at the beginning of May.
“The recent rebalancing was mostly supply rather than demand-driven with the rise in crude prices compressing refining margins even further and inventories of oil products rising fast relative to crude oil stocks,' the statement said.
'Now that the rebalancing has been set in motion, we expect it to continue. Our base case forecasts call for a further tightening of the oil market over the next few quarters,' it added.
Morgan Stanley added the supply cut made by OPEC+ is estimated to lead to a 4 to 6 million barrel-per-day undersupply in the global oil market during the last quarter of 2020 and the first quarter of 2021.
The firm also raised its Brent crude price forecast for the third quarter of 2020 to $35 per barrel from $30 a barrel but maintained its long-term estimate at $45 per barrel.
By Ovunc Kutlu