Barclays: Q2 Will Be Weakest For Crude Oil

WTI Crude was trading up more than 1.5 percent on Monday and continues to trade above the $58 mark. The recent rally can continue for a while, but according to Michael Cohen from Barclays, the second quarter of 2015 will be the weakest for oil.

Cohen was on CNBC recently to discuss his outlook for oil.

Too Early For Production To Flatline

"There is a couple of things fundamentally that’s driving the market right now," Cohen said. “ although Saudi production is up, implicitly that means their spare capacity cushion is less. I think that’s the first thing is that as the market tends to get some jitters whenever Saudi Arabia is producing at very high levels."

"Second thing going on right now is that we basically had some change in perception about the speed of U.S. oil production outlook and so the U.S. oil production outlook for now at least for April and May, some expect that production will basically flatline.”

He continued, “We think that it’s still too early to believe that we’ll see that flatlining in production. Rig count has come down, but we have this large amount of weighting on completion wells drilled, but uncompleted wells that can come on if prices do raise up to a certain level."

Second Quarter The Weakest

Cohen was asked what are the next price targets that he is watching on oil. He replied, "Well from a technical perspective, we kind of went through the main resistance level over the last week and so now many market participants are looking for that next, whatever that next technical target is. But from our perspective the fundamentals do win out and we see the second quarter as the weakest overall for the market."