Analyst View: Oil Price Outlook

The oil price has doubled since its rock bottom price of $30 a barrel in January 2016. But the run stops here, says Morningstar analyst Mark Taylor

Mark Taylor 9 February, 2018 | 8:34AM
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Mark Taylor: Our longer-term outlook hasn’t really changed. We still forecast a long-term oil price of $60 Brent. We think that’s the sweet spot, where it's efficient incentive to encourage production that the world needs, while not overly incentivising U.S. shale gas producers to over-produce and lead to weaker oil prices.

At the moment with the oil prices near $70 a barrel Brent we think that’s possibly a bit high and could encourage some over production. We've seen the oil price rise from a sub-$30 low to get to the level it’s at now. So, it's already had a very good run. To some extent you are possibly coming in if you do at this time a bit late to the story. There is still some reasonable value in some companies, but there has also been some takeover corporate activity happening as well, which has sort of added fuel to the fire.

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Mark Taylor  is an equity analyst at Morningstar.

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