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Raymond James Analyst Sees Crude Oil Trading Higher Than Current Levels In Next 6 Months

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After rallying for almost five months and trading above the $60 mark, crude oil has lost significant amount of those gains in the past two weeks.

Pavel Molchanov, Raymond James oil analyst, was on CNBC to discuss the reasons behind the fall in crude oil prices and share his outlook for oil prices going forward.

The Cuplrits

"Chinese demand was relatively slow for global oil market over the last several years," Molchanov said. "Ten years ago China used to grow oil demand 10 percent a year and now it's more like 2 percent a year. If that were to decline even further, of course that's negative. The biggest reason though why oil is down in the last 10 days is the obvious one -- it's Greece and the eurozone."

He continued, "Anything that pushes the U.S. dollar higher like these eurozone headlines is bearish for oil prices in the short run --that's just how the correlation works.

"And then lastly...the Iranian talks, if there is a deal that lifts the European oil embargo against Iran then there will be some more supply coming on the market. Not a ton, it's not going to be a game changer, but adding to some of the pain."

Won't Fall To January Lows

Molchanov was asked if he sees oil falling more from current levels. He replied, "Prices are still well off their lows from January. Barring some sort of real economic catastrophe, we do not see oil falling back to where it was in January. In fact, we see oil higher in six months than where it is today."

"Really important will be to watch where oil exits this year because that's when company budgets are going to be set. The oil and gas austerity cannot last forever, otherwise, oil supply is going to go into perpetual decline and we're going to be sitting on a shortage of oil 12 or 18 months from now," Molchanov said.

Posted-In: CNBC Oil Pavel Molchanov Raymond JamesCommodities Markets Media

 

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