Oppenheimer's Oil Forecast

Oppenheimer analyst Fadel Gheit on Thursday gave his predictions of the energy sector. Regarding oil prices, he suggested that, “There is a 10-15 percent potential downside risk in oil prices in the next 3 months before a bottom is established.”

In his report, Gheit said:

• Saudi Arabia will not cut oil production if it cuts into their market share. Thus we will need to see an agreement between OPEC nations, Russia, Mexico, and Norway to cut the supply of oil and maintain the proportion of their current production.
• Saudi Arabia's oil policy will not change unless there are policy changes in Russia and Iran.
• The fall in oil prices can be attributed to by the rapid growth of shale oil production, leading to a glut in the market.
• Looking forward, lower spending should reduce the oil supply and increase demand for oil.

The United States Oil Fund LP ETF USO tracks the price of crude oil. On Wednesday, the price of crude oil fell to its lowest value in six years which can be attributed to a report released by the Energy Information Administration, stating that inventories in the U.S. rose by nine million barrels last week to reach nearly 406.7 million.

Crude oil is priced at $44.50 per barrel.

The United States Oil Fund closed Wednesday at $16.56.