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- Oil prices have recently shot up into the $80 a barrel range.
- But the analysis behind the bullish case for crude is faulty.
- Analysts at Citi think it could fall to $45 a barrel within a year.
Oil could be back to US$45 a barrel within 12 months, Citigroup’s commodities chief Ed Morse said in an interview with the Financial Post, noting that the bullish case for crude is based on a faulty analysis.
The top oil forecaster who warned about the 2014 price collapse and also accurately predicted that the OPEC+ club would end its production cut deal earlier than everyone expected, has said that the capital efficiency and technological advancements that have improved oil recovery goes against the bullish scenario, because the better the recovery rate, the more oil that can be produced on the cheap. Also, he said, the bulls make a mistake in estimating a global acceleration in total oil production decline when this acceleration will only take place in mature fields, which represent about 45-50 percent of the global total.
See the rest of the story at Business Insider
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