rent Crude and WTI Crude prices hit a five-month high this week amid signs of tightening market and clashes in wildcard OPEC producer Libya.
Brent Crude topped $71 and WTI Crude rose above $64 a barrel in the middle of this week as supply reductions outweighed fears of slowing economic growth.
Following the crash in Q4 2018, oil prices have already increased by more than 30 percent so far this year.
But there is still room for oil to run and Brent could go as high as $80 a barrel this summer, due to geopolitical issues, OPEC and allies’ cuts, resilient demand, and not-so-crowded hedge fund longs suggesting that bulls have room to add more bullish positions in crude oil futures and options, according to a research note from RBC Capital Markets, cited by CNBC.
RBC strategists raised significantly their oil price forecasts for the average prices of Brent and WTI this year. Brent Crude is now seen averaging $75 a barrel in 2019, up from the previous call of $69.50, while WTI is expected to average $67 per barrel throughout the year, up from $61.30 in RBC’s previous estimate.
According to RBC’s experts, this summer, Brent could even hit $80.
This is a threshold which oil consuming countries such as India consider too high and which analysts say is the beginning of demand destruction.
“We see price risk asymmetrically skewed to the upside spurred by geopolitically infused rallies that could shoot prices toward or even beyond our high-end, bull-case scenario and test the $80/bbl mark for intermittent periods this summer,” CNBC quoted RBC’s research note written by strategists Michael Tran, Helima Croft, and Christopher Louney.