Salient to Investors:

The U.S., Europe and allies are willing to suffer higher fuel costs in order to curb Iran’s nuclear program. Oil is set to recover from its worst quarter since 2008 as a EU ban on Iranian oil takes effect, central banks act to protect growth, and on speculation OPEC will curb some of its excess supply.


The median estimate of 32 analysts expects oil to rebound to $114.50 a barrel in Q3.

Michael Lewis at Deutsche Bank  says oil has gone beyond economic fundamentals and expects a rebound – investors’ extreme pessimism is only justified if the U.S. was returning to recession.

Hussein Allidina at Morgan Stanley predicted OPEC will restrain production with Brent prices at about $90 a barrel.

Jeffrey Currie and David Greely at Goldman Sachs predicted the oil market will move into a seasonally-adjusted deficit as sanctions go into effect on July 1. Goldman Sachs predicted on June 11 that Brent will trade at $120 a barrel in three months, saying a long WTI position was compelling.

IEA predicted global oil demand to rise by 2.3 percent in Q3 .

Harry Tchilinguirian at BNP Paribas says consumption will be supported by monetary stimulus in emerging markets such as China, and Iran’s production can easily fall as sanctions begin to bite, forcing the world to live with lower spare capacity.

Hedge funds et al at June 17 had reduced bullish oil bets on WTI to a 19-month low and Brent to a 7-month low.

Colin Fenton at JPMorgan Chase predicts Brent futures to average $95 a barrel in Q3 due to the stormy outlook for the global economy, though over $100 at times.

Helima Croft at Barclays said the focus on Europe and the global recession has clouded estimates of the amount of oil removed by the Iran sanctions, sees $121 Brent at year-end.

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