Oppenheimer: Oil Prices Will Find It Very Difficult To Go Over $70-75 In The Next 2 Years
Crude oil has seen a massive recovery from mid-$40 levels just two months ago to above $60 where it is trading now. While some are bullish that this move will continue and prices will continue to move upwards till $100, Oppenheimer Energy analyst Fadel Gheit thinks that’s unlikely.
Gheit was on CNBC Thursday to share his outlook for oil prices.
“We see oil prices moving higher,” Gheit said. “But we are not likely to see a repeat of the recovery that we have seen over the last eight weeks. Eight weeks ago oil prices were $44, today oil prices are around $60. We think that oil prices will start moving up again, but probably at much slower pace. I still believe that oil prices will probably try to seek an equilibrium really round $60 to $65.”
“The worst forecast that is used is extrapolation. People saying that oil prices moves from $40 to $60, so they are likely to move from $60 to $100. That’s not necessarily going to be the case. I truly believe that oil prices will find it very difficult to go over $70-75 over the next two years.”
He continued, “I truly believe the shale producer will start growing their production sooner than many people think because they will be able to bring down costs a lot faster than many people think.”
“So, you will have a balance operation going forward here, where on one hand the Saudis do not want oil prices to go out of control again, but by the same token we are going to see shale production resume and grow, which only two months ago people thought that shale production will collapse in second-half of this year -- that’s not likely to be the case,” Gheit concluded.
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