Oil prices have been grinding higher and higher, spurring forecasters to predict they could hit $80 a barrel this year.
Oil is already trading at its highest levels in three years after a 22% gain for U.S. crude futures over the past 12 months, and some market watchers expect prices to take out new milestones as the rally continues in 2018.
On Wednesday, U.S. crude futures rose 0.97% to $63.57 a barrel and Brent, the global benchmark, was up 0.55% at $69.20 a barrel.
Byron Wien, vice chairman of the Private Wealth Solutions group at Blackstone, put $80 West Texas Intermediate on his annual list of 10 surprises in store for markets this year.
“Demand is going to continue to increase faster than supply,” he said in an interview. “It’s out of consensus, but people are underestimating the expanding middle class in the developing world and their resultant demand.”
Shrinking inventories, commitment by the Organization of the Petroleum Exporting Countries to cut output through the year, and only modest production growth from outside the group could all also push prices higher, he said.
Not surprised to see people touting these sort of prices, but the more realistic viewpoint would be see a downward spin back to around $60 and then a slow (and I mean very slow) increase over the rest of the year.
Max of $65-$66 by year end.
Just my opinion
Do you not see inventories dropping as low or do you think production will rise that quickly?
Barring unexpected international issues that would impact pricing, I see inventory shortages to be corrected by more aggressive drilling in horizontal plans. Operators are sitting on thousands of drilled yet unfrac'd wells. Plus thousands more lateral locations in multiple benches.
Lots of oil that can be quickly accessed and put into play.
Add in the addition of more frac crews and pumping capability so that there can be more completions of these wellbores.