Oil bulls are a lonely bunch these days.
The price of crude tumbled below $50 a barrel earlier this week. And even though prices have started to stabilize a bit, many experts still don’t think the sticky black stuff has bottomed just yet.
But there’s one brave soul who believes that there are better days ahead for good, old-fashioned Texas tea.
Chris Lafakis, a senior economist at Moody’s Analytics and head of the firm’s energy coverage, thinks oil prices will rally all the way back to $80 by the end of the year. That’s about a 65% jump from current levels.
Why is he so optimistic? Lafakis says investors are ignoring the simple rules of Economics 101.
He thinks that the huge drop in prices from more than $100 a barrel last summer will inevitably lead to higher demand … at a time when there will be lower supply because several companies are already starting to delay new drilling projects.
“There is a glut of crude right now and inventories are building. Oil companies can’t turn off wells that are already producing. But as they deplete, there will be no new investments and there has to be an effect on supply from that,” he said.
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