market is expected to see a downward correction this quarter but Brent prices will move higher in the final quarter of this year, according to a research note from Barclays.
"Prices have moved higher, due to a perfect combination of a favorable macro environment, a seasonal uptick in consumption, continued inventory drawdowns, and geopolitical unrest," the note said. "Certain factors that supported prices in July are unlikely to last, and we expect a downward correction during this quarter."
The report, however, forecasts Brent prices going up to $54 a barrel in last three months of the year, based on continued inventory draws, OPEC discipline, and the ongoing decline in output in Venezuela.
The report further added that during the recent market rally, prices moved higher because of a paring back of selling positions, rather than new buying trades entering the market.
"Fundamentals remain shaky this quarter, therefore any rally that occurs before more substantive inventory draws would be short-lived."
Oil markets traded lower in Friday's session, with U.S. crude remaining below $50 per barrel, restrained by rising output from the U.S. as well as producer club OPEC. Both Brent and WTI are down more than 9 percent since the start of the year and close to 20 percent over a 12-month period.
A number of analysts have predicted oil prices to go back up this year. earlier this week that there is very high probability Venezuela's state oil company will default and bring about a steep jump in crude prices.
"I think that's going to be the biggest geopolitical story to watch in the oil markets," said Croft, RBC's global head of commodity strategy, on Tuesday's "Trading Nation." "The question is how fast does Venezuela fail?"
Croft expects this could be a catalyst pushing oil prices to $70 to $80 a barrel by fall.
The Trump administration imposed sanctions on Venezuela, one of the world's top crude producers, earlier this week as political turmoil continued to cause chaos and the country runs out of cash. This was in response to Sunday's election of a constitutional super-body that Washington has already denounced as a "sham" vote, U.S. officials told Reuters.
According to Reuters, the U.S. is still considering broader sanctions against Venezuela's oil industry, which could hit the country's economy that is heavily-dependent on oil.
The country's economy is almost completely at the mercy of the oil industry as it contributes around 95 percent of the country's exports. However, falling investments in the industry has made it less profitable and productive.
According to Barclays, in the light of the political situation in Venezuela, the market appears better prepared to cope with any loss in supply. Sanctions targeted towards Russia are also unlikely to have much of a short-term or medium-term impact.
The inventory drawdown is the main reason why Barclays expects a small upswing in prices from Q3 to Q4. "Inventory drawdowns, Venezuela, and the Asian macro backdrop will likely play a more prominent role in the remainder of the year."