A look at where the price of oil is going from BlackRock Global Chief Investment Strategist Russ Koesterich:
- Recent crude price movements have been extraordinary
- Oil prices will, for the most part, remain range bound
- Brent trading between $50 and $65 & WTI trading at a modest discount
Though crude is currently a bit below the lower end of that range, oil prices should, for the most part, remain within that channel going forward, with a bias toward the lower end
Koesterich cites:
On the supply side,
- U.S. oil production is in outright decline ...Over the past three months, it has fallen sharply ... to the lowest level since February ... while US production efficiency is improving ...production is still 1 million bpd higher than it was at the start of 2014
- Other producers are ramping up... OPEC production is running at close to 32.5 million bpd, a rise of more than 2 million bpd since last summer. Several key producers, including Saudi Arabia and Iraq, have been increasing production in an effort to defend market share ahead of the likely lifting of Iranian sanctions in 2016.
On the demand side
- Economic growth, particularly in emerging markets, simply isn't strong enough to produce a sharp increase in demand
