Moody’s Economist Says Oil Could Rebound to $80

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.

via CNN

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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