The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, are up 6% and nearly 22%, respectively, this year. Oil futures closed at just over $49 per barrel on Monday.
Those are impressive statistics and those stats are not stopping some analysts from making bullish forecasts on crude. In fact, some oil market observers see significant upside ahead for the commodity. Fundamentals are improving in the energy market. For example, U.S., India and other major consumers are seeing increased demand, the Wall Street Journal reports. On the supply side, U.S. shale production has fallen off in response to the collapsed prices, and producers like Nigeria and Canada have experienced disruptions.
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“In a note to clients, Raymond James analysts led by J. Marshall Adkins say West Texas Intermediate will average $80 per barrel by the end of next year — that’s higher than all but one of the 31 analysts surveyed by Bloomberg,” reports Bloomberg.
OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers.
A number of factors are weighing on the global crude oil supply chain, including wildfires in Canada that disrupted major oil sands production in Alberta, pipeline attacks in Nigeria and outages in Venezuela. Consequently, Goldman projects production will remain below demand through the second half of the year.