Related: Energy Sector ETFs Are Breaking Out
Citigroup also projects a greater likelihood of persistent shortage of oil than a big jump in supply over the coming quarters. Ed Morse, global head of commodities at the bank, said that a handful of Organization of Petroleum Exporting Countries might already be pumping at maximum capacity already, and due to weak investment in exploration and development, there is a greater risk of a market squeeze once demand picks up, especially from a growing Chinese economy.
“Some people will say that OPEC can and will always pump more. After all, no one knows how to let greed get the better of them than OPEC,” according to ETF Daily News. “In fact, five OPEC members – Iraq, Iran, Libya, Nigeria, and Venezuela – may already be pumping at their maximum capacity. That’s according to a new report from Citigroup. Citigroup believes this fact is sowing the seeds for oil prices to squeeze higher – potentially much higher – as soon as 2018.”
For more information on the oil market, visit our oil category.