Analysts Calling For $60 Oil By July

Crude oil regained some momentum on Tuesday morning after declines on Friday and Monday as Canadian oil began to flow once again. After weeks of interruptions by wildfires in Alberta workers returned to the fields and turned on the taps again. Oil prices had climbed thanks to several unplanned outages in places like Canada and Africa, about 3.5 million barrels of oil have been offline each day in recent weeks, pushing prices over the landmark $50 mark for the first time in six months on Thursday.

While some outages are coming to an end–Canada’s Suncor Energy on Sunday said it has begun a “staged restart” of its operations–oil production in Nigeria remains precarious.

Earlier this month Nigerian oil Minister Emmanuel Ibe Kachikwu reportedly stated that the country’s oil production had fallen by almost 40% to 1.4m barrels per day due to militant attacks on facilities in the Delta region. This is the lowest output for over 20 years.

This news coincides with a report from the US Energy Information Authority stating that oil production from seven major US Shale facilities is expected to drop by 113K b/d to 4.96m b/d in June and May. There are also concerns that electricity blackouts and shortened working weeks will continue to hamper the production of oil in Venezuela.

Just as fears of oversupply in oil are ebbing, the EIA this month released its Outlook suggesting that there is potential for an upward revision to its 2016 demand projections given higher than expected growth of 1.4m b/d in Q1. India alone accounted for nearly 30% of the Q1 global increase in demand for oil in a trend which could continue into Q2 and beyond. The Indian economy grew 7.6% in the year to March 31 2016. Although the Finance Ministry has forecast a growth rate between 7% and 7.75% this year, the WSJ reported a projection of about 8% from a government official.”

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As markets opened on Tuesday morning WTI gained 22 cents to 49.55 while Brent oil remained over the all-important $50 price but eased 11 cents to 50.25 as traders prepare for the June 2^nd producers meeting.

As surprising comments from the UAE Minister of Economy helped buoy oil prices. The UAE’s economy minister joined forecasters looking for $60 crude this year with demand and production moving more in line. “It’s possible for oil prices to reach $60 or more during this summer” as demand increases in the US, the UAE Minister of Economy Sultan Al Mansoori said at a conference in Abu Dhabi on Monday.

Crude will end the year higher than $60 a barrel, Mario Maratheftis, global chief economist at Standard Chartered, said on Bloomberg TV. SEB Bank forecast last week that Brent would touch $60 at times in 2016.

Oil futures jumped 31 per cent this year, climbing above $50 a barrel last week, as US crude stockpiles declined, trimming a glut. Robust demand in India and other emerging nations led the International Energy Agency in May to reduce its estimate of the global oil surplus for the first half. Brent last traded above $60 in July.

The Organization of the Petroleum Exporting Countries meets in Vienna on Thursday and most analysts did not expect any changes in the group’s production.

While OPEC has been unable to agree on an output freeze to support prices, Iraq was the latest Middle East producer to raise its export quota ahead of the meeting, supplying 5 million barrels of extra crude to its partners in June.