Oil Price to Slide to $45 in 2018

Nothing is certain in the world of oil, but clouds appear to be gathering on the horizon

Stephen Simko, CFA 23 February, 2017 | 8:39AM

OPEC's production cuts and strong demand growth have 2017 crude fundamentals in their best shape since oil prices crashed two years ago. The consensus outlook is that fundamentals are now strong enough to remain healthy even after OPEC's cuts lapse. This might have been possible a few months ago, but the odds of this scenario playing out have markedly worsened since.

We our maintaining our forecast for strong oil prices in 2017, averaging $58 per barrel

The reason is that major increases in shale activity now have U.S. production firmly on a path of rapid growth, even if rig counts don't increase further. This growth plus the eventual supply increases from OPEC is likely more than enough to erase any market tightness and throw crude markets back into oversupply.

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About Author

Stephen Simko, CFA  is a senior stock analyst at Morningstar.

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