NEW YORK—This year, oil markets dipped under $0 a barrel for the first time. Now some investors and analysts are forecasting a rebound to $150 per barrel, the Wall Street Journal reports. But others are less sanguine, pointing to the pandemic as suppressing fuel demand even after the coronavirus threat fades.
“That funding pressure is going to be massive. It’s going to be really difficult for some of the producers to produce,” said Trevor Woods, chief investment officer of Northern Trace Capital. “We could hit $150 pretty easily by 2025.”
However, in the long run, most analysts predict prices will hit a level that will provide profit to energy producers from manufacturing enough crude to meet demand. COVID-19 has thrown a wrench in those calculations though, making investors unsure if transportation and consumption patterns will be permanently altered.
In late April, oil prices quickly recovered from negative territory as China’s economy picked up and OPEC, Russia and North American producers slashed output. However, that recovery has halted because of new coronavirus cases, which lessened fuel demand in southern and western U.S. states. West Texas Intermediate futures have hovered at about $40 a barrel since late June.
Overall, investment in oil and gas is expected to decline 32% in 2020 to reach $328.4 billion—the largest drop in a decade, according to the International Energy Agency. That will impact oil production, which analyst Christyan Malek with JPMorgan estimated will lose five million barrels a day. “Could we see oil move to $100 over the next two years?” Mr. Malek said. “Absolutely.”