Citi: Oil could hit $60 before year-end - Barron

Barron’s out with the latest report published on Sunday, citing Citigroup senior energy analyst Eric Lee, who previously called for a bear market in oil when the price was above $100.

Key Quotes:

“Lee projects demand of 97.3 million barrels a day in 2017, a record high, up from 96 million in 2016, driven largely by emerging market countries such as China and India. Simultaneously, reduction in supply from OPEC of about 0.7 million barrels a day versus the 2016 average should drive the price up before the end of the fourth quarter.

A decline in global oil inventories began after the first quarter, and Lee projects that it will continue at an accelerated rate through the end of this year.

Lee notes that oil speculators ignored details of OPEC's agreement, which ordered cuts to begin at the end of 2016 rather than when the accord was announced. That allowed participants to ramp up production during negotiations, which meant the cuts were struck from a higher base.

As for supply from the United States, Lee says continued pumping by producers will keep prices from skyrocketing back towards $100 a barrel, but their presence is unlikely to prevent an upward move in oil for the remainder of the year.

Following the jump to $60 Lee expects prices to remain flat heading into 2018, as the supply side catches up with demand. Barring major political disruptions from petroleum-producing nations, he expects the price of crude probably will not rise much above $60.”