Morgan Stanley hikes Q4 Brent forecast to $67.50/b

London (Quantum Commodity Intelligence) – Morgan Stanley Wednesday increased its forecast for Brent crude oil in the fourth quarter of 2021 to $67.50/barrel, up from $65/b, while maintaining its Q3 forecast at $67.50/b, according to sources familiar with a note sent to clients.

The move reflects firmer sentiment, including demand growth optimism and the market increasingly discarding an immediate return of Iranian barrels.  

The investment bank had previously flagged tightening fundamentals, noting the market was undersupplied moving into the summer months.

Martijn Rats, global oil strategic at Morgan Stanley, told Bloomberg TV in late March that the global market is undersupplied by 2-2.5 million bpd, a figure that was at the "historical upper end" of market undersupply.  

However, the Morgan Stanley forecast is more cautious than other forecasts, including Goldman Sachs and consultants FGE who have both set out $80/b scenario for as early as Q3.  

Meanwhile, Morgan Stanley lifted its long-term Brent crude forecast from $50/b to $60/b, saying the net-zero carbon drive will cut capex faster than demand declines.