Edward Morse Global Head of Commodity Research at Citi Group said in an interview with the Barron’s that oil prices will return to an average price of $65 per barrel in the last quarter of the year, which would mean a decline of more than 20%.
Now Edward Morse is not just a bear who wants to go against the wind, but he has already seen the signs of the times, and back in 2014 he was one of the few who predicted a decline in oil prices. As then, he also sees a decline today due to oversupply.
He said in the interview with Barron’s, “I think there’s been a colossal failure of the analytical community to look at what’s happening on the ground, to look at projects that have been reaching final investment decisions, to look at where the efficiency of capital is, to be blindsided by a prejudice, which says not enough capital is being spent, and decline rates are going up,” adding, “Everybody’s balances indicate oversupply by the end of the year.”
He also stated that an oil price of $100 is still realistic in the short term, but sees oil production rising to 102M barrels per day this year. U.S. producers alone could produce 800,000 barrels per day this year. They are currently producing 11.8M barrels per day.
This is slightly higher than the EIA’s forecast, which predicts an increase to 101M barrels per day, surpassing 2019’s record 100.5M barrels per day.