3 Reasons Why Oil Can Go Higher (Despite A Stronger Dollar And Weakening Global Economy)
Summary
- Oil prices have been climbing steadily since February.
- The convergence of several factors including an end to the "Iran Deal" could propel its ascent into the back half of 2018.
- While a stronger dollar (and weakening global economy) may seem like logical headwinds for oil, a number of factors could put a bid under crude.
Oil prices have been steadily climbing since February. And the convergence of several factors could propel its ascent into the back half of 2018.
While a stronger dollar and a weakening global economy may seem like logical headwinds for oil, Hedgeye Macro analyst Christian Drake and Director of Sales Daryl Jones highlight a number of factors which could put a bid under crude.
“If you’re talking about where oil is now, you’re up almost 30 percent on the year on a monthly average,” Drake explains in the recent clip above from The Macro Show. “Oil was up zero percent in June 2017, so that’s what you’re comparing against this June. If we hold current prices, you’re going to be up 44 percent year-over-year in the oil price in June, and you’re going to see that in the headline.”
Add to the mix geopolitical risks like a potential collapse of the Iran Deal (that could remove ~1M barrels/day) which Hedgeye Energy Policy analyst Joe McMonigle has been warning about for many months, and it’s easier to see why the price of oil could climb alongside the dollar.
Watch the 3-minute above clip for more.
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