Pavel Molchanov Predicts $60 Oil by End of 2016

By on February 24, 2016

Pavel Molchanov - Raymond JamesIn an interview on CNBC, Pavel Molchanov, Senior Vice President and energy analyst at Raymond James, discussed the state of the oil market. Molchanov pointed out the recent “watered down” deal between Saudi Arabia, Russia, Venezuela and Qatar to freeze production growth was the first such agreement in 15 years. It could lead to an agreement to cut production in the future, Molchanov added.

When asked whether the oil market had bottomed, Molchanov indicated it was close to a bottom since recent lows in the $25 per barrel range resulted in shutdowns of oilfields in Canada and Venezuela. “The important thing is today’s prices do not support supply growth anywhere in the world, including Saudi Arabia,” Molchanov said.

According to Molchanov, U. S. oil companies cut capital spending 30% last year, as well as 30% this year; the first time this has happened in back to back years in three decades.

“The normal field declines in places like the U. S., Brazil, Russia, Columbia; all of that is going to be heading into negative territory collectively by the second half of this year,” Molchanov stated. He predicted current high oil inventories would be trending lower by the middle of the year and the forward looking market would send prices higher into the $50 to $60 range, and possibly “north of $60.”

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