The price of Brent crude suffered its largest one-day fall since March on Tuesday. But following the recent slide, economists at UBS expect the oil price to rebound as a shortfall in supply relative to demand reasserts itself.
Oil price slide looks likely to be reversed
“Many OPEC+ oil producers continue to struggle to reach their production targets, and the group’s spare capacity to deal with future supply interruptions is dwindling.”
“Disruption of oil from Russia could further restrict global supply.”
“China appears to be transitioning toward a less disruptive policy on Covid-19, reducing the likely drop in energy demand.”
“Crude prices should rise as supply growth lags demand growth over the coming months. We see the price of Brent crude rising to $130 a barrel by September and trading around $125 through to the middle of 2023. This underlines our positive view on energy equities.”