Are oil prices headed lower? OPEC thinks so; Wall Street disagrees
OPEC has decided that the current global economic recovery is very fragile and that the smart course is to raise production only gradually. The Organization of Petroleum Exporting Countries said the global oil market will switch from being under-supplied to over-supplied as early as next month. Which would certainly imply that oil prices are set to fall from today’s (November 16) close of $80.79 a barrel for U.S. benchmark West Texas Intermediate and $82.52 a barrel for international benchmark Brent. Oil hit a 7-year high of $85 a barrel in October. But you don’t have to look far to find those who don’t see oil falling from today’s levels–and who in fact see oil staying at elevated levels into 2022 or 2023.. At the end of October Goldman Sachs forecast $85 for 2023. BNP Paribas sees crude at almost $80 in 2023. Other banks including RBC Capital Markets have talked up the prospect of oil being at the start of a structural bull run. My view? There’s just too much noise pointing in competing directions to feel certain about any trend. (At least not certain enough to encourage me to put money on the line in my portfolio.) But, if I had to pick a side, I’d go with the “oil will move lower from here” crowd.
