Oil has entered a new trading range of between $80 - $100 (over the next 12 - 18 months)

Harry Colvin

Longview Economics

Oil has entered a new trading range of between $80 - $100 (over the next 12 - 18 months). Underpinning that range are bearish fundamental dynamics: Western demand is in structural decline; US shale production is growing rapidly; Saudi is unlikely to cut production to support prices; Libyan supply is recovering and the vast majority (98%) of the world's oil supply is still profitable at a price of $80. Of interest, though, the major risks to that range are to the downside. Particularly important is the potential re-entry of Iran as a major supplier, which could add significant supply in the medium term. At the same time, the potential for a negative Chinese (and EM) growth surprise adds to those risks... for full blog please see our website (VIEW LINK)

Harry Colvin specialises in global asset allocation, macro themes, and commodities. He has built and developed Longview's commodity research process, timing models, trade recommendations and research products.


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