Why Oil Could Surge To $85 By Year-End: Analyst
News Article by Inplex Custom Extruders
Depressed oil prices are likely to rally in the second half of the year —perhaps as high as $85 per barrel, energy analyst Michael Rothman said Monday. That said, he added any move higher won’t be a result of coordinated production cuts.
An output cut “was never going to happen, the notion that [OPEC and Russia] would agree to reduce their output and help support prices was a nonstarter,” said Rothman, founder and president of the Cornerstone Analytics research firm.
While the bear case seems strong, “prices are not going to stay this low for an extended period of time,” he said. Rothman believes there are plenty of factors setting up the other side of the oil trade.
“Most budgets for the OPEC countries can’t be maintained at this level,” he continued. “Even the Saudi budget is built on almost $100 price for breakeven, which is why they’ve been dipping into their reserves.” So when will the reversal begin?
Rothman told CNBC’s “Worldwide Exchange” that $85 per barrel crude is just a few months away. “We’ll actually start to see it when we get past the winter. We’ll see inventories being drawn down, which most people you’re going to talk to aren’t expecting,” Rothman added.