Oil price outlook: 'we'll see prices push a little higher from here'

Oil is trading at its year-to-date high of $83 and change per barrel on Thursday but a Kpler analyst is convinced that it’s not out of room to run just yet.

Why does he see more upside in oil prices?

Matt Smith agrees that it might not be a linear increase but strong demand, he said, could push oil prices further up in the coming months. On CNBC’s “Worldwide Exchange”, he argued:

As we gear up for a peak summer driving season and as we see Europe, U.S, China exiting from refinery maintenance in the months ahead that’ll drive strong crude demand and we’ll see prices push a little higher from here.

Last week, the OPEC+ made a surprise announcement that it will cut production from next month as Invezz reported HERE.

“XLE” – the Energy Select Sector SPDR Fund has gained about 13% in less than thirty days.

Smith expects a hit to demand later this year

Interestingly, though, Smith is relatively dovish on oil for the back half of this year as the delayed impact of higher interest rates weigh on demand.

Earlier this week, the U.S. energy secretary Jennifer Granholm signalled intent to refill SPR to pre-Ukraine war levels. But the Kpler analyst doesn’t see it as a significant announcement for the near term.

We’re still pushing barrels out of the SPR. So, we’re not going to be purchasing to put them back in, let alone are we near the prices where we said we’d repurchase either. So, SPR doesn’t seem to be something that’ll materialise soon.

Also on Thursday, the U.S. Energy Information Administration (EIA) said Brent spot price will average at $85 a barrel this year.