Oil price slipped all the way down to the sub $70 a barrel level last week (find out more) but the Global Head of Commodity Strategy at RBC Capital Markets is convinced that a recovery is likely.
The bull case for oil price
Helima Croft expects oil prices to pick up again in the coming months considering the U.S. economy may just succeed in steering clear of a recession.
Put together with production cuts the OPEC announced last month and the summer driving season that’s right around the corner, she’s convinced of the upside in oil price from here.
There’s a significant Iraqi pipeline, 475,000 barrels a day taking crude from North to Turkey that’s been down for several weeks. So, as we get into summer, the supply shortages will start to take impact.
WTI is trading at $73 and change on Monday.
OPEC is meeting in early June
More importantly, Croft warned today that a further cut to production remained on the table for the next meeting of the petroleum exporting countries scheduled for early next month. On CNBC’s “Squawk Box”, she said:
They are going in person in Vienna on June 4th that raises expectations of additional OPEC action. These countries are very committed and I think they don’t want to risk another fallback in oil prices.
The RBC strategist also reiterated that China driven demand, even though it’s recovering at a pace that lags expectations, is on the rise, nonetheless, and, therefore, continues to be a meaningful benefit to the oil price.
Lastly, demand from India remains strong as well, she concluded.
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