Jefferies raised its average oil price forecast for 2015 yesterday, citing the near-40 percent rally in the market since January’s lows.
The advisory upped its average 2015 estimate for Brent to $60 a barrel from $52.50, and its estimate for WTI to $55.10 per barrel from $48.60.
The upwards-revised figures were still well below actual prices however. WTI futures for August delivery on the New York Mercantile Exchange had climbed 1.07 percent to $60.64 per barrel as of 06:57 BST today. Meanwhile, Brent in London traded for $64.27 per barrel.
Jefferies cautioned, however, that strong US production and potentially surging oil exports from Iran could exacerbate the current global surplus.
“Fundamental data indicates that the oil market is oversupplied by over 2 million barrels per day."
Price-reporting agency Platts said on Monday that OPEC output in May climbed to 31.1 million barrels per day, 1.8 million bpd above the group’s demand forecast for its oil.
Saudi Arabia has been steadily upping production, which is now at near-record levels, while Iraq is also pumping more than ever and plans to raise output further. Meanwhile, Libya has been tipped as increasing production itself in the near term, while a lifting of sanctions on Iran could unleash as much as 1m barrels per day on the global market in a matter of months.
“The fact remains that supply is continuing to outstrip demand,” analyst Dominick Chirichella of the Energy Management Institute said as quoted by The Wall Street Journal. “It is very difficult to see how the massive oversupply situation is going to reverse in the short to medium term.”
OPEC agreed at its June 5 meeting to maintain production quotas, a move seen as an effective carte blanche for members to pump out as much as they see fit.
The cartel has continually dismissed calls (both from outside and within) to curb production in order to prop up the oil price, which has slid some 40 percent from August.
Instead, the organisation, led by Saudi Arabia, has opted to protect market share and pump even more oil into the market in a bid to push against the competition, in particular US shale.
US production, however, has also shown little sign of abating and is at a 30-year peak despite a dramatic drop in the number of active drilling rigs in the country.
Meanwhile, a tropical storm in the Gulf of Mexico was also on investors’ radar.
The system, which was given an 80 percent chance of developing into a hurricane, is not expected to cause severe problems for the offshore production capacity in the Gulf. Still, Anglo-Dutch oil major Shell decided to evacuate non-essential personnel from its rigs as a precautionary measure.