Hints from OPEC that it is ready to supply more crude oil if needed should not be interpreted as signalling an immediate opening of the spigots, or suggest any material improvement in the tight global supply-demand balance any time soon, warns BMO Capital Markets. "The cartel is unlikely to jump the gun on production increases before it has to, as premature increases in the past have resulted in sharp price declines," writes BMO commodity strategist Bart Melek. As a result, he expects West Texas Intermediate to hit $80 a barrel-plus (U.S.) later in the year. U.S. crude fell 92 cents to $73.97 a barrel on Tuesday morning, continuing a two-day slide. "If there are geopolitical events with the potential to disrupt the flow of oil from the Middle East or elsewhere, a three-digit oil price is a possibility," Mr. Melek adds.
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