Citi bumped up its average 2014 forecast for WTI slightly, to $94 a barrel from $93, and raised the annual price for Brent, the international benchmark, to $103 from $98 for 2014.
For 2015, Citi raised WTI to $89 from $86, and Brent to $95 from $93 a barrel. But for the second quarter, it shaved its forecast for WTI by $1, to $88 a barrel, but raised Brent to $100 from $95.
"I think we're there" in terms of first-quarter highs, Morse said. "The second quarter is going to be the lowest. ... One reason is refineries are at the peak of maintenance, so demand is at its absolute lowest of the year, and the other is we're draining Cushing [Okla.]. ... Cushing is not going to be built up to where it was. Once it's drained, it's drained. The flow is going to the Gulf Coast, and it's going to pressure storage capacity along the Gulf Coast, and it will keep prices pretty low."
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Cushing is a physical storage hub for WTI futures, and oil stored there was basically landlocked before a recent pipeline opening.
Citigroup said the polar vortex was partly responsible for driving first-quarter oil prices back above $100. The extreme weather slowed production and drained inventories of distillates: eating oil and diesel.
"There's been two factors that drove the rally," said Gene McGillian, an analyst with Tradition Energy. "One is the opening of that pipeline. More oil heads to the Gulf Coast and because of export demand, it's going to raise the demand for WTI. It's really more distillates. My feeling is it's not going to be able to hold too long above there unless we have a supply disruption that changes the global picture."
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John Kilduff of Again Capital said the effect on WTI after the opening of the southern leg of the Keystone XL in January was that the U.S. crude rose closer to the international price.
"The glut is going to move to the Gulf Coast, and that should put downward pressure on the international price with the lessening of imports into the U.S.," he said.
U.S. imports have been falling as its production has picked up; the U.S. is now exporting about 2 million barrels a day in refined products.