On Tuesday, American multinational investment bank Morgan Stanley (MS) raised its year-end Brent price forecast to $40 per barrel due to tighter oil markets. The financial services company expects balance in worldwide oil demand and supply as nations ease restrictions amid the coronavirus outbreak and major suppliers cut resources.
“We expect demand to rebound to about 97 million barrels per day (BPD) by Q4 as economies come out of lockdown – a significant improvement although still down about 4 million BPD year-on-year,” Morgan Stanley stated.
The Organization of the Petroleum Exporting Countries (OPEC) and producers including Russia agreed in April to slash their combined expenses by almost 10 Million BPD from May to June to support oil prices. Fuel demand was severely affected due to the quarantines implemented by the government amid the pandemic.
“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,” the bank said.