Extreme turbulence may be the new normal for the oil market.
That’s the message from Citigroup, which on Tuesday became the latest oil bear to defect to the bullish camp. Edward Morse, Citi’s commodities guru, believes oil prices could rise to $61 a barrel by next year because the epic supply glut may soon be over. That echoes a recent optimistic call from from Goldman Sachs.
But Morse also has a warning for investors: oil prices are likely to gyrate way more than they used to. Of late, it’s not unusual to see oil prices move up or down by 3% to 4% on an intraday basis.
“The brave new world of petroleum promises to be volatile and the ‘new normal’ for oil makes stability elusive,” the Citi strategist wrote in a research report.