UBS is forecasting Brent crude oil back to US$87 (by year end)

UBS cite various supply and demand factors for their forecast. Beginning with Federal Reserve’s growth-oriented monetary policy contributing to a favourable environment for oil prices. UBS point out that Brent crude often benefits from positive market sentiment, which has improved since the Fed began easing its policies. In the long run, the Fed’s efforts to boost economic growth are likely to increase oil demand both in the US and globally.

On the supply side, global growth has been slow, increasing by just 0.3% from December to July, according to the International Energy Agency. This has maintained a supply deficit in the oil market. US production has slowed, and key producers like Brazil and Libya have also experienced weak output.

With the Fed’s easing cycle and the current supply-demand dynamics, UBS expect oil prices to rise to approximately $87 per barrel by year-end.

This article was written by Eamonn Sheridan at www.forexlive.com.