Oil prices might touch USD80-USD100 a barrel by Q2/Q3, 2017, some analysts predict.
When I wrote this piece during dinner time at Park Hyatt Chicago, I was wondering about the banks that were talking about the collapse of the energy market and IMF talking about Saudi Arabia going bankrupt. Investors put question marks against your name if you send JAMES BOND stories to their emails. Sharing market intelligence reports with clients/investors based on facts and figures builds your credibility.
In the case of oil prices, based on our intelligence sources, they might touch USD80-USD100/Barrel by Q2/Q3, 2017. The factors are very simple as to why oil prices are climbing up:
1. Demand is now reaching 94 million barrels per day
2. Weak dollar makes commodities expensive
3. Geo-political risks add to the price movement
4. Shale gas bankruptcies are touching USD87 billion in USA/ Canada. Supply constraints are happening in the North Sea as well according to the latest reports gathered through my networking.
So, I’ve been unapologetically bullish in oil since Jan 27, 2016 when I was in Dubai making a presentation to the Pakistan Business Council members at Raffles Hotel Dubai. The number of drilling rigs bringing new oil to market is way down by 73%. US oil production is down to just about 1.3 million barrels a day. However, demand for gasoline is rising and remains solid.
Yes, it will take some time to work off the incredible amount of oil in storage right now. But that will happen over time. Right now, however, I’m seeing signs of capitulation from oil companies. In the investment world, ‘capitulation’ has a special meaning. When we talk about capitulation in relation to investing, we are talking about the point where investors give up and sell their assets, no matter the price.
Capitulation happens after sharp sell-offs, after investors have taken a brutal beating at the hands of sellers. Losses grow and grow until it looks like everything could be lost. They sell because they just want the pain to stop … The irony is that capitulation is considered a bullish indicator. When investors capitulate and sell, it’s seen as a sign that there are no sellers left to dump stock and push prices lower. And that, in turn, suggests that prices can finally rise again.