Oil prices have been strengthening over the past few weeks. The trend is not of particularly noticeable proportions, with Brent still stuck in the low $80s and West Texas Intermediate hovering around $80 per barrel.
This could change later in the year, however, Morgan Stanley’s global oil strategist Martijn Rats has predicted. In fact, prices could rise so sharply that they might take some by surprise.
“There is a view in the market that the non-OPEC producers can meet all of the demand growth this year and therefore there isn’t much incremental room for OPEC oil and that means you rely on continued OPEC cuts,” Rats told CNBC this week.
However, actual reality has proven to be a bit different from that perception, the analyst said, telling CNBC that “On the supply side, we’re seeing a slowdown in U.S. shale, we’ve seen a wobbly start in Brazil [and] we’ve seen a wobbly start in Canada. We expected inventories to build, but year-to-date, they are kind of flat. If in the first quarter, inventories [are] flat then they can draw possibly quite significantly during the summer period.”