Oil prices are expected to reach $77 per barrel (/b) in the second quarter (Q2) of the year and remain in the  70s over the summer, said the Mitsubishi UFJ Financial Group (MUFG), a Japanese financial services company in a new report.

MUFG expects a ramp-up in global oil demand in the next six months, owing to both vaccines and mobility trends increasingly becoming more resilient to virus waves.

“Thereafter in Q4, we see oil prices gradually regressing back towards the equilibrium price for the oil industry, which we view as being centred on the current anchor near the long-term marginal cost of production and support of about $55-65/b for Brent,” MUFG said in its latest Oil Market Weekly.

Oil prices have edged slightly lower this week with investors increasingly pricing in some prospects that Iran will resume oil exports on a large scale following a potential diplomatic breakthrough where the US and Iran return to the terms of the nuclear agreement.

“Our base case scenario has consistently been that a mutual return to the JCPOA in the first half of 2021, and particularly before Iran’s own presidential elections on 18 June remains unlikely (20% probability) (see here). We continue to remain bullish and for the week ahead look for further evidence of demand strength, falling inventories, rising premiums and the forward curve in steeper backwardation,” the MUFG report said. – TradeArabia News Service