The CEO of Chevron, Mike Wirth, has predicted that oil prices could return to $100 per barrel. This comes as oil prices reached fresh intraday highs for the year, although they settled slightly lower for the session. The recent uptick in oil prices can be attributed to expectations of tighter oil supplies, with Russia and Saudi Arabia curbing production.
While the market is experiencing bullish sentiment and prices are on the rise, analysts remain cautious about the sustainability of these levels. Tom Kloza, global head of energy analysis at the Oil Price Information Service, has compared oil trading to a game of “Chutes & Ladders,” highlighting the potential for price volatility. He suggests that while prices may reach $100 per barrel in the short term, it remains uncertain whether they can sustain that level for an extended period.
The biggest threats to the ongoing oil rally are changes in market fundamentals. Troy Vicent, senior market analyst at DTN, points to a potential decrease in crude imports by China and rising Chinese product exports as factors that could cool off the rally. Any slowdown in demand could also impact the decisions made by oil-producing countries like Saudi Arabia with regards to supply cuts.
In the United States, the Energy Information Administration’s monthly report indicates expectations for a significant drop in oil production from major shale plays. This would be the largest month-on-month decline since December 2022.
Chevron CEO Mike Wirth acknowledges that $100 oil prices could create some economic drag, but he believes that the underlying drivers of the U.S. and global economies remain strong. He also notes that despite the volatility caused by the pandemic, Chevron has not changed its long-term price expectations for oil.
Overall, while there are predictions and expectations of oil prices reaching $100 per barrel, market analysts advise caution due to potential changes in market fundamentals and the impact on global economies.
Sources:
– Myra P. Saefong and Barbara Kollmeyer, MarketWatch (Article)
– Edward Morse et al., Citi (Note)
– Troy Vicent, DTN (Quote)
– Alex Hodes et al., StoneX (Newsletter)
– Dow Jones Newswires (Copyright)