Oil prices have already bounced significantly from their recent lows, but one closely-followed economist sees much more upside ahead for crude.
Venerable analyst Jim O’Neill this week predicted that Brent crude oil — the most popular European per-barrel oil benchmark — could hit $80 over the next 12 months. That would be a 26% rally from current levels.
CNBC has the details behind his bullish call:
“While oil prices could be about $60 per barrel in November 2018, my guess is that they will have risen to about $80 per barrel in the meantime,” O’Neill wrote in Barron’s this weekend.
O’Neill, now an economics professor at the University of Manchester, says the market is finally waking up to the fact that global economic growth is gaining momentum and likely expanding at 4 percent or higher. That means there will be more demand for oil.
The economist sees geopolitical risks, particularly in Saudi Arabia, as a big potential catalyst for crude prices over the next year. That country has implemented startling governmental changes lately, including the arrest of and confiscation of wealth from some of its highest-ranking royal family members.
“With the spot price having now moved above the five-year forward price, one could conclude that a trend change is under way. For my part, I’m unsure, but I wouldn’t be surprised if it happened,” O’Neill wrote in the latest issue of Barron’s over the past weekend.
O’Neill’s experience in the market stretches back several decades, and he is the former chairman of Goldman Sachs Asset Management.
The United States Oil Fund LP ETF (USO) was trading at $11.64 per share on Wednesday morning, up $0.06 (+0.52%). Year-to-date, USO has declined -0.68%, versus a 18.67% rise in the benchmark S&P 500 index during the same period.
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The article Former Goldman Head Predicts $80 Oil In 2018 (USO) was originally published at ETFDailynews.com.