Update on RJ's Oil Price Forecast - March 13
Posted: Mon Mar 13, 2017 9:47 am
If you'd like to see the Raymond James update, send me an e-mail. I cannot send it to all members at once. dmsteffens@comcast.net - Dan
Last week, Raymond James hosted its 38th annual institutional investor conference with nearly 1,000 investors and 300 companies. Despite the recent pullback in crude oil prices, the energy presentations were much more “energetic” and upbeat than last year (when crude was hovering around ~$35/bbl). Similar to last year, however, general investor interest in energy seemed to be relatively lackluster. In fact, there was not one energy company in the top third of the rankings for “one on one” demand.
That said, we remain as confident as ever that
1) meaningfully higher 2017 oil prices are still required to bring the global oil market into balance,
2) we are still in the early stages of a multi-year energy up-cycle, and
3) this recent correction is a great buying opportunity for energy investors.
As always, the highlight was our annual energy dinner, where about 130 energy executives and buy-side investors shared their perspectives and insights into topical energy investing topics. Once again we received real-time anonymous voting trends from the audience on key controversial industry topics. In this week’s “Stat” we will share both our updated views and the latest energy insider perspectives gleaned from our conference.
While recent U.S. inventory trends and comments from Saudi and U.S. shale executives have spooked the oil markets, we remain comfortable with our bullish 2017/18 oil outlook given:
(1) global demand remains strong, with recent upward revisions;
(2) continuing oil supply declines in countries like Mexico, Nigeria, China, and Venezuela;
(3) lower-than-expected OPEC supplies due to higher-than-expected cut compliance and unrest in Libya; and
(4) the fact that near-term U.S. oil production growth is facing headwinds from labor and equipment constraints.
In sum, we believe that the recent oil price decline is an overreaction and that all recent fundamental data points to substantially higher oil prices going forward.
Last week, Raymond James hosted its 38th annual institutional investor conference with nearly 1,000 investors and 300 companies. Despite the recent pullback in crude oil prices, the energy presentations were much more “energetic” and upbeat than last year (when crude was hovering around ~$35/bbl). Similar to last year, however, general investor interest in energy seemed to be relatively lackluster. In fact, there was not one energy company in the top third of the rankings for “one on one” demand.
That said, we remain as confident as ever that
1) meaningfully higher 2017 oil prices are still required to bring the global oil market into balance,
2) we are still in the early stages of a multi-year energy up-cycle, and
3) this recent correction is a great buying opportunity for energy investors.
As always, the highlight was our annual energy dinner, where about 130 energy executives and buy-side investors shared their perspectives and insights into topical energy investing topics. Once again we received real-time anonymous voting trends from the audience on key controversial industry topics. In this week’s “Stat” we will share both our updated views and the latest energy insider perspectives gleaned from our conference.
While recent U.S. inventory trends and comments from Saudi and U.S. shale executives have spooked the oil markets, we remain comfortable with our bullish 2017/18 oil outlook given:
(1) global demand remains strong, with recent upward revisions;
(2) continuing oil supply declines in countries like Mexico, Nigeria, China, and Venezuela;
(3) lower-than-expected OPEC supplies due to higher-than-expected cut compliance and unrest in Libya; and
(4) the fact that near-term U.S. oil production growth is facing headwinds from labor and equipment constraints.
In sum, we believe that the recent oil price decline is an overreaction and that all recent fundamental data points to substantially higher oil prices going forward.