Oil: Production cuts, stabilization of the global macro and weaker USD to support crude prices – Danske Bank

According to analysts from Danske Bank, the mains risk in the short-term, to their expectation of a recovery in oil prices are to the upside, a further rise in tensions between the US and Iran, and on the downside further escalation in the trade war and deterioration in the global economy coupled with a still strong US Dollar. 

Key Quotes: 

“Supply remains tight in the oil market, as OPEC+ has extended output cuts and production levels in Iran and Venezuela remain depressed by sanctions. However, lacklustrer demand due to the escalation of the trade war and weak global manufacturing activity is keeping the oil market balance fairly stable. We see this situation extending in the short and medium-term.”

“We expect oil prices to recover over the remainder of 2019. We forecast Brent will average USD70/bbl in Q3 and USD75/bbl in Q4. We expect OPEC+ cuts, a stabilisation of the global macro economy and eventually a weaker USD to underpin oil prices.”