Oil prices are at a 30-month high, despite boosted US production and inventories and a drop in the US rig count. The harsh winter is playing a short-term role, but some analysts are suggesting that 2018 prices will surge past our forecast of US$ 60-65 per barrel of West Texas Intermediate.
We’re not convinced – yet, but their reasons are: 1) growing confidence in demand growth in developed and emerging markets; 2) booming consumption in China (the world’s largest oil consumer), which reported modest gains in 2017 new passenger-car sales but big jumps in used car buying; and 3) speculation that US shale production might not be able to maintain currently high rates. We still short on crude, but are watching these factors carefully.
By Peter Rosenstreich