OPINION
We see Analyst bear and bull reporting as a conduit to double digit short term returns. As Its an example of well touted market noise that effects price in either direction for about 36-48 hours and then corrects back to longer term averages. Important to note that extreme positions tend not to support the moving price average.
According to Citigroup, if the world enters a recession, oil prices could drop to $65 or lower
Citi’s Ed Morse “Oil Bear” the global head of commodity research published that crude oil could collapse to $65 a barrel by the end of this year and slump to $45 by end-2023. Even though the international benchmark on average has been trading around $120 a barrel and cut its demand estimate for products to 2.2 million barrels a day, down from 3.6 million barrels at the start of the year.
Conversely and bit more pragmatic ….
Goldman Sachs, Jeffrey Currie “Oil Bull” whose global head of commodities research said last week that the upside risk in crude oil and refined products “is tremendously high right now.” The recent pullback in oil prices could be a buying opportunity because prices are set to go higher from here this summer.
“Ultimately, remember, the only way of solving these problems is to increase investment, so we stick to our guns of oil prices moving into the summer up into $140 a barrel range given record-level cracks, and that’s going to be a lot more upside to product prices.
Ending note
As for the recent press on oil prices I leave you with a quote by Ross McKitrick, a professor of economics at the University of Guelph in Ontario….. “Nobody’s willing to invest in expanding refinery capacity because the outlook from everything that the government has said is you won’t get the approvals,”. Goldman nails it!
