Deloitte released its latest forecast on oil prices on Wednesday morning and says prices are expected to recede in the coming months.
The report suggests that the drop is due to increased production from OPEC countries and says international demand for oil is also expected to decline in the second half of the year.
Currently, West Texas Intermediate is sitting around $73 USD per barrel and the Canadian counterpart, Western Canadian Select, is trading at around $48 USD.
The report says that differential in price has narrowed 30 percent in the first quarter of this year.
Analysts with Deloitte say it might be because of increasing demand for Canadian heavy crude from US Gulf Coast refineries that are looking to replace supplies previously obtained from Venezuela where production volumes are declining.
"Day to day there's always those fluctuations but over a longer span what we are seeing is there’s a lot of stability and we're going to see oil, kind of, managing in that $5 from where it is right now and that brings a lot of certainty to producers, makes them feel a little bit more confident in making their investment decision. So while we see those differentials moving, I think it's going to be in a far narrower range than it has been in the past," said Andrew Botterill from Deloitte.
Deloitte says prices are expected to stabilize between the $65 to $75 USD range by the fall.
