Raymond James raised their oil price forecast

[dan_s]

Energy Stat: Like $50 Oil? You Ain't Seen Nothing Yet - Raising 2017 WTI Forecast to $80

The key point to hammer home is this: Our oil model has recently turned meaningfully more bullish and our 2017/2018 oil price forecasts are now even higher than our previous (January) oil price outlook (that was already considerably more bullish than most on the Street). After receiving plenty of "funny looks" at the beginning of this year - especially during oil's February bottom - we are largely seeing our bullish oil thesis play out. Our oil model is more bullish largely due to recent changes in the following three oil supply issues: 1) organic declines outside the U.S. are steeper than expected; 2) there have been numerous unforeseen production outages; and 3) logistical bottlenecks are set to constrain the U.S. production recovery in 2017/2018. On the demand side, 2016 growth is also tracking modestly ahead of our original expectations. Putting it all together, global oil inventories over the next six to 12 months should draw down faster and further than we previously anticipated. In response, we are raising our 2017 forecast for WTI (from $75 to $80) and Brent (from $79 to $83) - this marking the cyclical peak of the oil recovery. Similarly, we are initiating a 2018 forecast for WTI ($75) and Brent ($80). We are reiterating our long-term forecast of $70 for WTI and $75 for Brent.

[dan_s]

Keep in mind that my forecast models and valuations for the Sweet 16 and all of our model portfolio companies, assume the following oil & gas prices during the forecast periods. I do make adjustments for regional price differentials and each company's hedges. The actual prices used in each forecast model are show at the bottom of the forecast models. Obviously, if WTI does go to $80/bbl, my valuations will go a lot higher. REMEMBER, SPECULATORS SET THE OIL AND GAS PRICES. THEY ARE FORWARD LOOKING. WHEN WE SEE WEEK AFTER WEEK OF DRAWS FROM STORAGE (ALREADY HAPPENING), THEN THE OIL PRICE WILL RAMP UP. We need to get past this stupid Brexit fear.

Oil __ Ngas

$40 $2.00 < Q2 2016
$50 $2.50 < Q3 2016
$60 $2.75 < Q4 2016

$60 $3.00 < 2017 and beyond

Raymond James now expects WTI to be $50 on July 1 and steadily ramp up to $70 by September 30. Q3 of each year is when we get the biggest spike in demand for refined products. Go to the IEA Oil Market Report to see the chart: https://www.iea.org/oilmarketreport/omrpublic/

The "wild card" for oil prices is another big unexpected supply problem. If this happens in Q3, I think the oil price could really take off.

[dan_s]

WTI closed over $50/bbl today and I think it will move higher once the "FEAR" of Brexit is behind us. Remember, demand for oil based refined products is going to spike by over a million barrels per day from Q2 to Q3 and Non-OPEC supply is now falling by over 200,000 barrels per day each month.