EXCLUSIVE: Russia’s Matrix Capital thinks oil may hit $42 mark by end of summer

By Andrei Skvarsky.

Russian boutique asset manager Matrix Capital expects that oil prices, which have been edging up over the past few weeks, will continue to rise slowly and might reach between $40 and $42 per barrel by the end of summer.

“I think we might see this price closer to the end of summer,” Matrix general partner Pavel Teplukhin told EmergingMarkets.me in an email interview. However, it might be up to six months before this price level is reached, he said.

Teplukhin’s forecast is similar to that made recently by the chief oil and gas analyst of investment bank Renaissance Capital, Alexander Burgansky, who predicted that Brent would close at $40 in the third and at $45 in the fourth quarter of 2020.

Teplukhin argued that behind the oil price rise are a production cut agreement reached by OPEC and non-OPEC producers (the group known as OPEC+) several weeks ago and an anticipated increase in demand because of lockdown easing in various countries.  

“Demand will keep growing and supply will keep going down,” he said.

“The oil price isn’t balanced yet, the supply and demand levels in the market are adjusting to the terms of the OPEC+ deal,” Teplukhin said.

Moreover, Covid-19 lockdowns have interfered with effects of the agreement and “it’s unclear which are the more important factors”.

“We can see that US shale oil producers are dissatisfied with the price level, and Saudi Arabia has been forced to review its budget and its entire declared large-scale programme of economic reforms,” Teplukhin said.

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