Morgan Stanley: Oil prices could unexpectedly rise this summer | Wilnesh News

Investors may be caught off guard by the magnitude of oil price gains this summer Morgan StanleyMartin Mouse.

His comments came as oil prices rose on Wednesday on worries about potential supply disruptions following Ukrainian drone attacks on Russian refineries and hopes that the Federal Reserve might soon begin cutting interest rates, which traditionally boosts demand.

At 12:20 pm London time, international benchmark Brent crude oil futures for May delivery were at $83.23 per barrel, up $1.30, while U.S. West Texas Intermediate (WTI) April delivery futures were at $78.95 per barrel, up from $78.95 per barrel. About $1.37.

Brent crude oil futures prices have been trading in a tight range of $75 to $85 since the start of the year.

“They’re pretty benign. We had a nice rally in December, January and the first half of February, but we’ve been range-bound the past few weeks,” Rats told CNBC’s “Squawk Box Europe” on Wednesday.

“The market believes that non-OPEC oil producers can meet all the demand growth this year, so there is not much room for OPEC oil to increase, which means you are dependent on OPEC’s continued production cuts,” Ratz said.

“Right now, they’re doing that, but people think that dynamic is limiting prices a little bit at the moment. We have a lot of spare capacity. I think the summer may be tighter than people expect, but that’s the dynamic that’s there right now.”

Earlier this month, OPEC+ agreed to extend voluntary production cuts until the end of the second quarter to support short-term stability in the crude oil market.

OPEC+ refers to a group of some of the world’s largest oil producers, including heavyweights such as Saudi Arabia and Russia.

Asked why fuel supplies might be tighter in the summer, Ratz said the oil research community was “quite cautious” about the outlook for the start of the year.However, a series of stronger-than-expected data has led many to believe Oil demand forecast raised.

“On the supply side, we’re seeing a slowdown in U.S. shale production, a shaky start in Brazil, a shaky start in Canada. We expect inventories to increase, but to be a bit flat so far this year. If inventories are flat in Q1, then Inventories are likely to be significantly reduced during the summer.”

Ratz said there are a number of indicators, such as physical differentials and refining margins, that suggest the oil market has tightened a bit more than current spot prices indicate.

“Now, we’re currently undergoing refinery maintenance, so (it’s) always a soft time of year, but I think as the summer driving season gets underway, inventories will be reduced… Look, we’re not calling for a supercycle, but we’re Could have a little strength in the summer.”

The summer driving season typically refers to the months between the Memorial Day and Labor Day holidays in the United States when people in the Northern Hemisphere tend to hit the road.

In an interview with CNBC’s Dan Murphy in late January, Energy Aspects’ Amrita Sen said geopolitical factors such as the Israel-Hamas war and Red Sea tensions could also push oil prices higher this summer.

Referring to the Red Sea attack, Sen said the naphtha (a mixture of hydrocarbons) and jet fuel markets had been significantly affected.

“This is a weak period for jet demand,” Sen said.

“Summer aircraft are coming and we think these attacks will continue for several months, so we may see some real price increases in the summer.”