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Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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EMEA Investor Of the Year Predicts Brent At $70 By 2017 End

Oil Barrels

Oil prices are set to hit the $70 barrel mark later this year, according to Pierre Andurand, the managing partner at Andurand Capital Management that won 2017’s EMEA Investor’s Choice Award.

The general consensus among energy experts, on the other hand, puts the Brent barrel at $55 by the end of the year, and at $60 in the next 2 to 3 years.

"I think oil prices are likely to recover to around $70,” Andurand told CNBC. “I think the market will switch to backwardation – sustainable backwardation – by late summer and that will bring the next wave in oil prices.” The market phenomenon he referred to defines a pattern in commodity prices where short-term spot price oil contracts become more expensive than long-term forward contracts.

Andurand called the mid-2000s price crash, which caused the West Texas Intermediate (WTI) barrel to fall to a fifth of its original value. At the time, the commodities expert stood bearish, making his current prediction the subject of market intrigue.

"U.S. shale producers have been hedging a lot of their production, capping prices, so the improvements in fundamentals were not priced in at all, but I believe that now when people will really see that inventories are going down fast, that eventually the fundamentals will win and prices will go higher," he explained.

Related: OPEC Weighs Extension As Oil Markets Start To Lose Their Nerve

Regarding the Organization of Petroleum Exporting Countries’ (OPEC) coming decision on the future of the bloc’s production cuts, Andurand says the decision to extend the cuts for another six months will be based on price levels at the time of final negotiations. At $65 a barrel, the cartel is not likely to maintain the reductions, he added.

"I think we will be higher by [the time negotiations get serious] because it will be obvious to everybody that inventories are going down and the OPEC cut really worked," he added.

By Zainab Calcuttawala for Oilprice.com

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  • John Wilkes on April 03 2017 said:
    There is nothing about oil that isn't suspicious. From the earliest days the grease magnates cheated the people who they got their oil from. When the Cartel started setting their price, the same cheat you now mentality remained. To this day I am astonished at the smoke and mirrors methods the industry has used to jack up the value.of grease. My personal favourite was a non-storm in the Gulf of Mexico that generated a $2.00 hike. When electric cars populate the cities and highways and the grease business crashes, there won't be much sympathy for them.
  • Dan on April 03 2017 said:
    I see a lot of traffic for this time of year. I got stuck at the Macinac Bridge in Michigan for 5 hours waiting for the bridge to reopen. When it did, it was 1 hour and 20 minutes to get across. Traffic was massive. If its that bad this time of year, traffic is up. Still cool, heats still on.
  • petergrt on April 02 2017 said:
    " . . . I believe that now when people will really see that inventories are going down fast, that eventually the fundamentals will win and prices will go higher".

    Inventories are going down - FAST . . . .???

    This guy must have huge long positions . . . . . as have most hedge funds.
  • Tim Yee on April 02 2017 said:
    Between 55 - 60 - Nobody knows. There are hedge-funds that won awards but also got their predictions wrong. Best to do your own research and roll the dice.
  • Josh Gregner on April 02 2017 said:
    I believe it, when I see it. Frankly, at this point I don't see the production cuts or the demand uptick that would be needed to make this happen.

    And oil futurs certainly don't indicate that we are heading to higher prices any time soon.

    But if this would happen, I think we would see an adaption of EVs at a much faster pace than what we see now: India just announced that they want to be 100% EVs by 2030. A high oil price is sure going to accelerate this transition...
  • GREGORY FOREMAN on April 01 2017 said:
    With all due respect, if oil breaks $55 a barrel on a "sustained" bases, I'll be more than surprised. $70 a barrel is simply a "SWAG" nothing more and nothing less. Would be nice, but simply want happen.
  • Kr55 on March 31 2017 said:
    Congrats to Glencore and other trading houses that built up physical oil over the last year who were able to flood the US stocks to create a fake panic to make some big money playing oil contracts and equities by manipulating oil prices.

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