From Oil Patch Hotline

Two major Wall Street banks are projecting higher prices for crude oil later this year because of production cuts by OPEC and hundreds of wells shut down in leading oil producing states of Texas and North Dakota.

UBS sees Brent rising to $43 a barrel by the end of the years because of lower prices and rising to $55 a barrel by mid-2021.

Goldman Sachs upped its Brent forecast from $52.50 to $55.63 a barrel  and raised West Texas Intermediate crude from $48.50 to $51.38 a barrel for 2021.

“Oil production has started to decline quickly from a combination of scale back in activity, shut-ins and core-OPEC/Russia production cuts. Demand is also beginning to recover from a low base, led by a restarting Chinese economy and increasing transportation demand in developed market economies,” Goldman Sachs said.

“We still expect oil demand to contract strongly this quarter, though not as much as we did before; we now estimate minus 15 million barrels per day  year on year for the second quarter, versus minus 20 mbpd previously,” UBS said.

The bank expects global oil supply to contract by nearly 6 mbpd year on year in the second quarter, citing forced production shut-ins in North and South America as current low price environment fails to cover operating costs.

During early trading May 6 the New York Mercantile Exchange, WTI had risen to $23.62 a barrel and Brent was up to $29.81 a barrel.