$ 80 Brent Oil Could Destroy Demand: Morgan Stanley


[ad_1]

An old saw says the cure for rising oil prices is rising oil prices, and Morgan Stanley apparently agrees.

He sees Brent crude at $ 80 a barrel as “destructive” to demand. The idea is that high oil prices discourage users from buying it.

Brent traded at $ 79.17 on Wednesday, up 8 cents. Oil demand rises as Delta COVID-19 variant declines and supply declined after recent hurricanes in the United States

“Oil prices have become disconnected from the marginal cost of supply. Instead, they’re traveling to the level where demand destruction begins, which we estimate at around $ 80 a barrel, ”Morgan Stanley wrote in June, as quoted by CNBC.

On Tuesday, its analysts Martijn Rats and Amy Sergeant said: “This remains our thesis”.

“The price at which the destruction of demand begins can be devilishly difficult to estimate,” analysts said.

“We leave our price guidance unchanged for now, but recognize that, on current trends, our upside scenario to $ 85 per barrel clearly exists.”

Rats and Sergeant noted that the average crude inventory draw averaged 3 million barrels per day last month, compared to 1.9 million barrels per day in the first few months of the year.

“These drawdowns are high and suggest the market is more undersupplied than is commonly thought,” analysts said. Another bullish sign: Flights and other transportation have resumed, they said.

On Monday, TheStreet.com founder Jim Cramer discussed his picks of oil stocks, including Chevron (CVX) – Get the report from Chevron Corporation and Devon Energy (DVN) – Get the Devon Energy Corporation report.

[ad_2]

About Alma Ackerman

Check Also

Tough roster decisions await LAFC as it sorts through player contracts

Tough roster decisions await LAFC as it sorts through player contracts

The eventual MLS Cup champion LAFC celebrates after their victory over Austin FC in the …

Leave a Reply

Your email address will not be published. Required fields are marked *