Supply gap will push up oil prices to $75-80 in the second half of the year

On May 22, 2019, Morgan Stanley expects Brent crude oil prices to rise to $75-80 per barrel in the second half of this year, predicting that oil market supply will be significantly tightened. The investment bank said that the oil market supply gap in the second quarter was 600,000 barrels per day, and the gap in the third quarter was expected to be 1.1 million barrels per day.

The investment bank's analyst wrote in a research note on Tuesday that this should cause Brent forward futures to be in a large reverse price differential and support spot prices at a higher level.

Crude oil futures held steady on Tuesday, as the tensions between the US and Iraq have heated up to disrupt supply expectations, offsetting concerns that a protracted trade war between Washington and Beijing will limit demand for crude oil.

Morgan Stanley pointed out that Iran and Venezuela's production decline, Libya's downside risks are increasing, and the OPEC core countries' implementation of production reduction agreements is too high, balancing the fundamentals of demand for short-selling.

Morgan Stanley said that so far, these "strong but opposing forces" have kept oil prices at a very stable level. Given the tight market conditions, Venezuela and Iran's production is further reduced, which means that OPEC's other member states may have increased supply. Space.

Analysts said that under such circumstances, oil prices may not be able to maintain current levels. During 2020, Brent crude oil may return to a long-term stable price of around $65 a barrel.