Can crude oil hit $80 by 2017? Aye, says the man who predicted recent surge
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Can oil at $80 by 2017 be a possibility? If J Marshall Adkins, the man who correctly predicted a rebound in crude at the start of 2016, is to be believed, oil may surge as much as $80 by 2017 on supply constraints.
“West Texas Intermediate will average $80 per barrel by the end of next year,” said Adkins of Raymond James in a note to clients, as reported by Bloomberg. The figure is higher than all but one of the 31 analysts surveyed by Bloomberg, who sees West Texas Intermediate at $82 per barrel next year.
After hitting a 14-year low of around $26 a barrel in February, it’s only in May that oil prices surged past $50, and has hovered in the narrow range of $47-$52 since then.
While Organization of the Petroleum Exporting Countries (OPEC) may not have reached an agreement to cap oil production, Raymond James could identify three different supply-side constraints that are likely to push up sagging crude prices.
First, the production outside United States may fall more than what was anticipated. The analysts cite organic declines in China, Columbia, Angola, and Mexico as prompting this downward revision.
Secondly, the unexpected or unplanned supply outage may also persist all through 2017. A string of outages mainly on account of wildfires in Canada and unrest in Nigeria and Libya had knocked out nearly four million barrels per day of production in May.
“Adkins and his fellow analysts noted such outages may take a further 300,000 barrels per day out of global supply.
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