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Oil Heading for $60


The UAE’s economy minister sees oil jumping to $60 per barrel in the next few months.

"It’s possible for oil prices to reach $60 or more during this summer,” UAE economy minister Sultan Bin Saeed Al Mansoori said at a conference in Abu Dhabi on May 30.

There is a growing chorus of oil market watchers that see the oil price rally continuing, after rallying more than 80 percent over the past several months. According to Bloomberg, the global chief economist at Standard Chartered Plc says WTI and Brent will rise above $60 before the end of the year, and SEB Bank agreed that the markets would see oil prices above $60 in 2016. Related: The Crude Crash Has Created Oil’s Technological Superpowers

Those voices come two weeks after investment bank Goldman Sachs, a notorious bear when it comes to oil prices, suddenly become a lot more bullish on crude. "The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected," Goldman concluded earlier this month. That statement came not too long after Goldman had warned that record high oil storage levels around the world threatened to push crude prices down into the $20s again.

Now, sentiment is trending up along with prices. Global demand continues to rise, and summer driving season in the U.S. could add a bit more strength on the demand side. The IEA has already predicted that the global surplus shrinks to just 0.2 million barrels per day in the second half of the year, but as the surprise outages in Canada and Nigeria make clear, unexpected events could tighten markets further.

Still, the markets are not without headwinds. Suncor Energy is bringing some oil production back online in Alberta this week as the threat of wildfires recedes. Also, Iraq raised its export quota ahead of the OPEC meeting, signaling its intent to step up exports. Related: 3 Years Of Painful Cuts Sets Markets Up For Serious Supply Crunch

Nevertheless, global demand continues to rise while producers face disruptions and natural depletion. That points to higher oil prices.

"I think the secular trend is higher. We have been saying this for a few months. The damage we are doing to the non-OPEC supplies is just tremendous at this point in time. Non-OPEC supplies are down about 1 million barrels per day…So yes, we can get a bit of a correction in the near-term. Net-length is very high in the market. But the secular trend is definitely up," Amrita Sen, cofounder and chief oil analyst at Energy Aspects, told CNBC in a May 27 interview.

By Charles Kennedy of Oilprice.com

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Leave a comment
  • Kelly G on May 30 2016 said:
    (The UAE’s economy minister sees oil jumping to $60)

    ROFL! What would you expect him to say?
  • Kris H on May 30 2016 said:
    With The "big" producers going all out with their pissing contest there is no quick way for opec to correct a deficiency any more. Even with oil storage at record highs that is now the only buffer between a supply drop and a oil shortage. With that said, now that the market is approaching "balance" any output disruption will push the price up (again because Saudi, Iran, Russia, Kuwait, Iraq exe... have all maxed out production and can not increase to adjust to the market anymore).
  • Matt on May 30 2016 said:
    The oil supply in the US is at record highs. The US EIA does not track crude oil levels at sea. There is 5.8 billion barrels of oil at sea. You could shut down the entire global supply for 200 days and still not leave a dent in the oversupply. Do some research please. Don't just parrot what everyone says.
  • matt on May 30 2016 said:
    There are 5.8 billion barrels of oil at sea. If the US quit using oil for 305 days, the market would be balanced.
  • Joe on May 31 2016 said:
    Nice to see some one can suck and blow at the same time Matt. the US EIA doesn't trace crude oil levels at sea, and some how you know though that there are 5.8 billion barrels of oil at sea. Do you even know how much that is LOL?
  • Lmormon on May 31 2016 said:
    Oil is one of few commodities that is priced according to whatever THEY say it is. How you can have record high supplies while the world is cutting back and moving to alternate sources but the price of crude increases defies all laws of economics. Greed is what drives the price pure and simple. So sick of reading articles about how low oil and gas are somehow bad for everyone. Since oil bottomed out I have seen a huge snap back in jobs, house and car purchases and travel picking back up... Looks like the only people that suffer are those that have priced their commodity too high and thus are upset that they are not racking in record profits at the expense of the American and world economy.
  • Kilon on May 31 2016 said:
    Just look at Omans Graphic... 1980 to 2014 average is above 600,000 barrels. This even improved in 2015... to around 900,000 barrels. Means in ~35 years we have a production of at least 18 billion (a bit more I would say) barrels... and Oman is not a OPEC member and is a country told to have quite low reserves... OPEC countries produce a billion barrel each year, or like Saudi Arabia even over 3.5 billion (UAE, Kuwait around 1 billion), and their reserves did not change for over a decade... if the small "oil poor" Oman can do such things, what can OPEC do?! What does Opec do? Producing and Producing... get the stuff sold! (Before the oil age ends, it won't end because of an oil shortage, like all "ages" it will end because of new technology and increasing natural gas production and consumption, alone Qatar became a Gas giant)

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