One respected and prominent oil expert sees the price of crude hitting $85 per barrel by the end of 2016.
Oil analyst Mike Rothman’s projection to
CNBC is nearly double what some on Wall Street have been forecasting.
"You have two things going on here this year: One is demand growth and the other is contraction of non-OPEC supply, the first time in about eight years," the founder and president of energy research firm Cornerstone Analytics told CNBC.
With both benchmarks back above $40 per barrel, analysts said that more investors could be attracted if prices now breached highs reached in March, when Brent rose above $42.50 and WTI rose to $41.90 per barrel.
"Crude oil prices are back to or near the March high and a significant resistance point. If oil prices can break above this level, investor sentiment towards commodities should receive a further boost," ANZ bank said on Monday.
Oil traders continue to place hopes on the oil producers' meeting to prop up crude prices that have been severely depressed by a global supply glut.
But analysts at Goldman Sachs, who expect oil to average $35 a barrel in the second quarter, cautioned that the outcome of the meeting in Qatar could prove bearish for the market.
Last week many oil market speculators agreed with a more bearish outlook as data from the InterContinentalExchange (ICE) showed that net long positions on Brent had been cut to 355,225 contracts in the week to April 5.
However, analysts are forecasting firmer demand for oil over the longer term.
Researchers at Bernstein expect global oil demand to increase at a mean annual rate of 1.4 percent between 2016 and 2020, compared with annual growth of 1.1 percent over the past decade,
Reuters reported.
"We expect oil markets to rebalance by the end of 2016. This will allow prices to recover towards the marginal cost of $60 per barrel," Bernstein said, adding that it expects global demand to reach 101.1 million bpd by 2020, from the current 94.6 million bpd.
Oil’s recent gains match similar swings upward last year, and oil typically has a seasonal rally early in the year as traders anticipate the annual spike in gasoline demand, Brian LaRose, senior technical analyst at the brokerage ICAP PLC, told
The Wall Street Journal. U.S. gasoline consumption has just set new records for March, another factor that has helped push oil higher in recent months.
“The whole seasonal pattern, I don’t think it’s done,” LaRose said. “And there’s a lot of hope...that OPEC’s going to save the day.”
(Newsmax wire services contributed to this report).
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