$100/bbl crude oil a notion not dismissed by some top traders, forecasters

Jun. 15, 2021 11:15 PM ETEnergy Select Sector SPDR ETF (XLE), USO, UCO, XOPBNO, BGR, ERX, OIH, GUSH, VDE, XOP, UCO, USO, XLEBy: Carl Surran, SA News Editor46 Comments

Many blue oil drums
Guven Polat/iStock via Getty Images

  • U.S. crude oil prices hit a 32-month high today, and talk is rising among some top oil traders and forecasters that crude could return to $100/bbl before the end of this year.
  • But it is more likely that OPEC+ will provide a price ceiling, with greater risks of supply shortages and potential price shocks coming in future years.
  • ETFs: XLE, USO, UCO, XOP, VDE, GUSH, OIH, ERX, BGR, BNO
  • Goldman Sachs head of commodity research Jeff Currie sees a 10% probability for triple-digit crude this year while warning of the end of investment in long-term crude projects and the potential ripple effect on prices further out.
  • "Long-cycle production is dead," Currie told an S&P Global Platts conference, noting that the prevailing view in the oil industry now is to get money back at higher prices rather than return to long-term investments.
  • Goldman's central scenario continues to predict $80/bbl oil, as vaccination rollouts continue to lift global economic activity and oil demand.
  • Currie's $100 potential price was supported in separate comments from Trafigura's head of commodity trading Jeremy Weir at the FT Commodities Global Summit.
  • When asked if oil could hit $100/bbl due to potential supply constraints in the coming years due to a spending cutback on fossil fuels, Weir acknowledged "a chance for a while to get up to those numbers because you need higher prices to incentivize" production.
  • Vitol CEO Russell Hardy, also speaking at the FT event, also warned that the world faces a potential global oil supply shortage over the coming decade as a pullback from fossil fuels projects would create a gap with expected demand.
  • Hardy expects oil prices to stay in the $70-$80/bbl range for the rest of 2021, but under-investment caused by last year's price slump means "there is going to be a gap between 2025 and 2035 in terms of supply and demand."
  • Meanwhile, BP economist Michael Cohen said $100/bbl oil was "unlikely" given the amount of spare capacity from Saudi Arabia and other OPEC members and the production they likely will bring on in the months ahead.
  • Exxon Mobil shares rallied today to their best level since January 2020 as Bank of America said it sees the company raising its dividend before the end of the year.

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