Oil prices may rally to $80/bbl due to supply constraints: Fat Prophets
On Thursday, oil prices rose roughly 2 percent in the US on indications that producers could increase output gradually. Brent crude settled at $75.84 a barrel, up $1.22, or 1.6 percent. U.S. West Texas Intermediate crude settled at $75.23 a barrel, gaining $1.76, or 2.4 percent.
To give a better idea about where the prices might be headed, David Lennox, analyst at Fat Prophets, in an interview with CNBC-TV18 said, “We certainly have seen the oil prices wanting to run towards USD 80 per barrel.”
According to him, there is a good reason for that. “The real key is that the global economy is starting to open up a little more than it has in the last twelve months and that is bringing on expectations of higher demand for petroleum products. With that, with the constraints that we are seeing with the supply at the moment, we have seen the oil price starting to want to head towards USD 80 per barrel,” he explained.
“At this stage, with the Organization of the Petroleum Exporting Countries (OPEC) meeting having been postponed for further talks, if there is perhaps a greater need to regrow those cuts back further, then we do expect that the oil price will rally back towards USD 80 per barrel and may not go much further than that at least for now,” he said.
On metals, he believes, there is a good reason for metals prices to have risen to where they are now and it has got a lot to do with the stimulatory programmes that many governments have instigated.
“With those stimulatory programmes rolling out now into the real economy, we do think that that puts a very good base underneath the commodity supply and demand chain,” he shared.
US dollar strengthening puts somewhat of a headwind against the commodities space, he said.
Source: CNBC TV18