The price of Brent crude suffered its biggest one-day drop since March on Tuesday. But after the recent crash, UBS economists expect oil price to rebound as tight supply relative to demand reasserts.
The drop in oil prices could be reversed
“Many OPEC+ oil producers continue to struggle to meet their production targets, and the group’s spare capacity to deal with future supply disruptions is shrinking.”
“Disruption of oil from Russia could further constrain global supply.”
“China appears to be transitioning to a less disruptive policy on Covid-19, reducing the likely drop in energy demand.”
“Crude prices should rise as supply growth lags behind demand growth in the coming months. We see the price of Brent crude rising to $130 a barrel in September and trading around $125 until mid-2023. This underscores our positive view on energy stocks.”
Source: Fx Street
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