Depressed oil prices are likely to rally in the
second half of the year —perhaps as high as $85 per barrel, energy
analyst Michael Rothman said Monday. That said, he added any move higher
won't be a result of coordinated production cuts.
West Texas Intermediate crude tumbled around 5 percent in late morning trade to under $32 per barrel, as hopes for a deal among OPEC countries and Russia to reduce output dwindled.
Read More Pickens: Oil already bottomed—here's what's next
An output cut "was never going to happen, the notion that [OPEC and Russia] would agree to reduce their output and help support prices was a nonstarter," said Rothman, founder and president of the Cornerstone Analytics research firm.
While the bear case seems strong, "prices are not going to stay this low for an extended period of time," he said. Rothman believes there are plenty of factors setting up the other side of the oil trade.
"Most budgets for the OPEC countries can't be maintained at this level," he continued. "Even the Saudi budget is built on almost $100 price for breakeven, which is why they've been dipping into their reserves." So when will the reversal begin?
Rothman told CNBC's " Worldwide Exchange " that $85 per barrel crude is just a few months away. "We'll actually start to see it when we get past the winter. We'll see inventories being drawn down, which most people you're going to talk to aren't expecting," Rothman added.
"That's really the bottom line of where supply and demand meet," he said. "I expect that the sentiment is [then] going to shift."
end quote from:
https://www.yahoo.com/finance/news/oil-could-hit-85-years-160000315.html
After listening to this oil expert I was thinking that what he was actually saying was that People are going out of business trying to sell oil at this price. Also, that demand will start to exceed output this year so stockpiles of oil on hand are going to start to reduce and not necessarily be replaced because of people going out of business trying to sell oil at these low prices. This appears to be the factors he's weighing the most.
West Texas Intermediate crude tumbled around 5 percent in late morning trade to under $32 per barrel, as hopes for a deal among OPEC countries and Russia to reduce output dwindled.
Read More Pickens: Oil already bottomed—here's what's next
An output cut "was never going to happen, the notion that [OPEC and Russia] would agree to reduce their output and help support prices was a nonstarter," said Rothman, founder and president of the Cornerstone Analytics research firm.
While the bear case seems strong, "prices are not going to stay this low for an extended period of time," he said. Rothman believes there are plenty of factors setting up the other side of the oil trade.
"Most budgets for the OPEC countries can't be maintained at this level," he continued. "Even the Saudi budget is built on almost $100 price for breakeven, which is why they've been dipping into their reserves." So when will the reversal begin?
Rothman told CNBC's " Worldwide Exchange " that $85 per barrel crude is just a few months away. "We'll actually start to see it when we get past the winter. We'll see inventories being drawn down, which most people you're going to talk to aren't expecting," Rothman added.
"That's really the bottom line of where supply and demand meet," he said. "I expect that the sentiment is [then] going to shift."
end quote from:
https://www.yahoo.com/finance/news/oil-could-hit-85-years-160000315.html
After listening to this oil expert I was thinking that what he was actually saying was that People are going out of business trying to sell oil at this price. Also, that demand will start to exceed output this year so stockpiles of oil on hand are going to start to reduce and not necessarily be replaced because of people going out of business trying to sell oil at these low prices. This appears to be the factors he's weighing the most.
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