Bank of America Forecasts Oil Price Decline in Autumn

Bank of America's Francisco Blanch expects oil prices to decline in autumn, predicting Brent to hit the low sixties and WTI to reach the high fifties. Blanch notes that OPEC+ has increased oil production for August, which has been absorbed by the market so far. However, Blanch is negative about the second half of the year and sees a potential drop in oil prices.

Oil prices tumbled sharply in Asian trading on Monday as OPEC+ agreed to a larger-than-expected production increase for August. The decision, which exceeded market expectations, has sparked concerns about oversupply in the oil market [1].

The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, announced a 548,000 barrels per day (bpd) increase in oil output for August. This hike was larger than the 411,000 bpd increases already implemented for May, June, and July. The group also warned that it might consider another 548,000 bpd hike in September at its next meeting on August 3. This move marks a continued rollback of the voluntary 2.2 million bpd cuts initiated earlier this year to support prices [1].

The increase in production comes amid ongoing concerns about sluggish economic growth in key markets like China and uncertainty around U.S. trade policy, including tariffs. U.S. President Donald Trump extended the tariff deadline from July 9 to August 1, creating uncertainty over his tariff stance [1].

Francisco Blanch, a strategist at Bank of America, expects oil prices to decline in the autumn. Blanch predicts that Brent crude could drop to the low sixties and West Texas Intermediate (WTI) to reach the high fifties. Blanch notes that while the market has absorbed the August production increase, he is negative about the second half of the year and sees a potential drop in oil prices [2].

The recent supply hike and Blanch's bearish outlook suggest that the oil market may face further downward pressure. Traders remain cautious about the global demand outlook, given the potential impact of trade barriers on economic activity and energy consumption.

References:
[1] https://www.investing.com/news/commodities-news/oil-prices-tumble-as-opec-agrees-tobiggerthanexpected-supply-hike-4123802
[2] Bank of America's Francisco Blanch expects oil prices to decline in autumn, predicting Brent to hit the low sixties and WTI to reach the high fifties. Blanch notes that OPEC+ has increased oil production for August, which has been absorbed by the market so far. However, Blanch is negative about the second half of the year and sees a potential drop in oil prices.