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Thursday, October 15, 2015

Analyst Provides Five Key Reasons That He Believes Oil Prices Will Spike

From The Week:
Analysts are divided on whether the rally can last. Goldman Sachs told clients that the fundamental market picture has not changed — and that the glut of oil will continue, with foreign producers making up for declining U.S. production. A month ago, Goldman predicted that oil prices could fall as low as $20 a barrel and could stay low for years. 
On the other hand, Phil Flynn, senior energy analyst at The PRICE Futures group, predicts that "in the long-term, high prices could be here to stay and some of the bearish arguments are falling flat right now." 
Here are five key factors that will drive oil prices higher, according to Flynn: 
1. The main reason for the rise in prices last week was the announcement by OPEC Secretary General Abdalla Salem el-Badri that global investment in oil projects would drop by 22.4 percent this year, leading to lower supply before long. The International Energy Agency expects a similarly sized drop, with Fatih Birol, head of the agency, calling it "the highest drop in history." 
"This has been our base case for maintaining our bullish outlook for oil," Flynn wrote earlier this week. "We have said that the historic drop in oil rig counts, capital spending, and energy projects we are laying the groundwork for a future spike in price."
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