- The recent OPEC+ production cut announcement sent oil prices soaring and drove many analysts to boost their price forecasts, but Citigroup is bucking that trend.
- Citigroup’s commodity chief Ed Morse believes oil prices will fall below $80 as China’s slower-than-expected recovery will hurt demand.
- Morse also pointed to the potential of additional oil output from Venezuela and Iraq, which would undermine the recent OPEC+ cuts.
Citigroup has bucked the bullish oil price forecast trend in analyst circles, expecting oil prices to dip instead of rally further despite OPEC+’s efforts in that direction.
The bank’s commodity chief Ed Morse noted that China’s post-pandemic recovery was progressing more slowly than initially expected and that could affect demand patterns, ultimately hurting prices.
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We’re waiting to see what’s really happening with the economy, but it is a slower recovery,” Morse told Bloomberg. “If anything, that will be an end-of-year phenomenon.”
What’s more, Citi believes that traders may be underestimating additional oil output potential in Venezuela and Iraq, which, if it materializes, would offset some of the latest OPEC+ cuts.