Oil is unlikely to fall below $70 a barrel, but it would take a “wild card” event to push prices above $90, said Ed Morse, global head of commodity research at Citigroup Inc.
Brent crude prices are finding support near $70 a barrel due to several fundamental factors, Morse said in a Bloomberg Television interview. For starters, OPEC+ doesn’t want oil prices to fall below that level and has shown that it will slash production in order to keep prices afloat. Another factor: The US’s commitment to refilling its Strategic Petroleum Reserve with prices around $70 a barrel.
Oil is unlikely to rise above $90 a barrel with supply tightness factored in, but Morse notes that extreme weather events, including hurricanes, could change the outlook. Additionally, the obstacles to invest in fossil fuels and reduction in demand are leading to more market volatility.
The oil market will move between supply shortages and oversupply, said Morse. But “oversupply won’t be big enough to get us down to $20, or let alone negative prices, and the undersupply won’t be big enough to get us over $100, but it will mean volatility in the market.”
