Oil prices will "increase modestly" in the next three months as supply cuts kick in and the summer driving season revs up, according to Deloitte's latest forecast.
Andrew Botterill, Deloitte's head of oil and gas for Canada, sees North American benchmark West Texas Intermediate (WTI) crude (CL=F) averaging US$72 per barrel in 2023, down from the US$80 to US$85 range he called for in April.
WTI futures climbed 0.42 per cent to US$72.09 per barrel as at 7:39 a.m. ET on Thursday, as traders assessed the impact of the latest round of supply curbs from OPEC+ and a U.S. industry report that pointed to another drawdown in nationwide commercial inventories.
"Over the next quarter, oil prices will likely increase modestly as summer driving season gets into full swing, leaving crude inventories on a downward trend in the United States," Botterill wrote in a report released on Thursday.
Generally accepted as the months between the U.S. Memorial Day and Labor Day holidays, summer driving season is a yearly boost to fuel demand and pump prices as North Americans hit the road to enjoy warmer weather.
On the supply side, OPEC+, which pumps about 40 per cent of the world's crude, has been cutting output since November in the face of flagging prices. Last month, Saudi Arabia announced a surprise one million barrels per day cut, and an extension of the total OPEC+ 3.66 million barrels per day curtailment to the end of 2024. On Monday, Saudi Arabia said its unilateral cut will last into August. Russia has also announced a plan to cut exports and lower production by 500,000 barrels a day in the next month.
"Supply curtailments are expected to prop up prices in a weaker demand scenario, resulting in an effective short-term mitigation while economic uncertainty lingers," Botterill wrote.
His report predicts the price of WTI will fall to an average of US$70.05 per barrel in 2024, before climbing throughout the remainder of the decade to an average of US$81.20 in 2030.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.