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    Crude oil prices: Further recovery to be more modest - Wells Fargo

    According to analysts from Wells Fargo, a further recovery in crude oil prices over the next months are likely to be more modest.Key Quotes:“Oil prices in recent months have continued to climb off the lows reached early this year. Prices for both Brent and WTI have been flirting with $50, increasing conviction that prices have bottomed for the current cycle.”“The rebound in prices has been primarily driven by changes on the supply side. U.S. production has fallen by about 0.5 million barrels per day since the start of the year, leading to a slower pace of inventory growth. That said, inventories in the U.S. remain elevated (about 30 percent above their 5-year average), indicating further production cuts will be needed to bring the market back into balance.”“Supply disruptions elsewhere in the world are providing some temporary support to prices. Wildfires in Canada have taken roughly 1 million barrels of production offline, while outages have reduced supply in Nigeria, Libya and Venezuela.”“The 80 percent rise in Brent prices since January’s low has taken pressure off of OPEC members to dial back production. At its June meeting, members decided to keep output unchanged.”“A further recovery in prices is likely to be more modest in the months ahead as supply disruptions run their course. Demand in the first quarter was stronger than expected, but overall remains modest given the weak global growth outlook.”  

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