The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, continues ascending to multi-year highs and is up more than 6% just this month. Some oil market observers believe the commodity can continue surging.
Year-to-date, USO is higher by nearly 20%. Current OPEC compliance with production cut plans remains above their historical average, and it usually takes between two to three quarters for inventories to normalize after the cuts. While demand has yet to catch up to elevated supplies, rebounding economies in Europe and steady economic growth in the U.S. could prompt more upside for oil this year.
In fact, oil expert Tom Kloza is not ruling out a return to $100 per barrel.
“The Oil Price Information Service [OPIS] global head of energy analysis blamed fresh geopolitical tensions for his bullish forecast — citing a potential U.S. military response if Iran resumes its nuclear program, Venezuela’s oil production nose diving and ‘spectacular’ global demand,” reports CNBC.
More Upside Ahead for Oil?
OPEC’s supply cut appears to be working because prices are rising at a time when U.S. oil put is reaching near record levels and continuing to rise. U.S. shale producers are likely to keep pumping at record levels as prices rise to exploit spreads between West Texas Intermediate and Brent prices.