Oil Could Again Drop to $40 Says Analyst

Several factors are conspiring to keep a lid on oil — and could even send prices sharply lower, analyst John Kilduff told CNBC on Monday.

A recent rally — nearly 5.5 percent for West Texas Intermediate crude — has U.S. shale producers coming back online, said Kilduff, a founding partner of energy and metals specialist Again Capital. WTI, above $50 per barrel in early trading Monday, could turn south again to the low $40s later this year, he warned.

Kilduff wonders whether more American supply may test the resolve of Saudi Arabia’s commitment to the output-cut agreement among OPEC and other international players.

“It’s kind of a one-two punch,” he said. “[In April], we’re going to see U.S. domestic production from the shale players rise by 100,000 barrels. That’s going to hurt.”

“Saudis are not going to want to lose market share,” he argued.

Another dynamic is the Trump administration’s support of key proposed pipelines that were out of favor under former President Barack Obama, Kilduff said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza