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Investing.com - A "less cautious" stance on crude prices in the near term is "warranted" due to solid fundamentals and elevated geopolitical tensions, although the case for a "constructive" medium-term view is getting stronger, according to analysts at Barclays (LON:BARC).
Writing in a note to clients on Thursday, the analysts led by Amarpreet Singh said that recent data has "continue[d] to surprise to the upside," adding that global crude oil stocks have increased marginally in the current quarter and demand in China -- the world’s biggest oil importer -- "remains relatively robust."
Output by the OPEC+ producer group have also fallen short of increased targets, while exports from countries that oversee much of the world’s spare oil capacity have been "fairly steady," the strategists added.
Meanwhile, oil-directed drilling activity in the U.S. has eased, they noted, flagging that the Energy Information Agency now sees output sliding to flat this year and declining by 100,000 barrels per day fourth quarter-to-fourth quarter.
At the same time, comments from U.S. President Donald Trump suggest that there has not been much progress in nuclear talks with Iran, a major oil producer currently facing steep sanctions.
On Wednesday, media reports said the U.S. is preparing for a partial evacuation of its embassy in Iran. An official from Tehran previously said that strikes on U.S. bases in the region would be carried out if ongoing nuclear talks collapse and devolve into a conflict.
A major de-escalation in the war in Ukraine -- and a possible release of fresh oil supplies from Russia -- has proven to be elusive during the early months of Trump’s second term in the White House, the analysts said.
"However, worries of a broader slowdown weighing on the complex remain elevated," the analysts wrote.
Against this backdrop, the case for a $80 per barrel price for Brent through 2030 "looks strong," they said. At 03:42 ET (07:42 GMT), Brent futures had dropped 1.3% to $68.89 a barrel and U.S. West Texas Intermediate crude futures had fallen 1.2% to $67.33 per barrel.