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Why WTI Crude Oil Prices Are Up After the IEA Oil Market Report

This is a syndicated repost published with the permission of Money Morning - We Make Investing Profitable. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

The rise in WTI crude oil prices today came after the IEA oil market report was released this morning. The agency increased its global oil demand forecast by 200,000 barrels to 1.6 million barrels a day in 2015. That number is projected to keep rising by 1.4 million barrels a day next year.

The organization stated demand will rise significantly as consumers continue to respond to low oil prices.

“Oil’s plunge below $50 barrels a day from triple digits a year ago has seen demand react more swiftly than supply,” the IEA oil market report said. “Against this backdrop, many participants in the oil industry have adopted a new mantra – ‘lower for longer’.”

But Money Morning Global Energy Strategist Dr. Kent Moors sees surging oil demand discrediting that mantra. In fact, he sees WTI crude oil prices reaching $76 a barrel by the end of the year for one huge reason…

Why WTI Crude Oil Prices Will Reach $76 by December

Between now and September, the number of active oil rigs will significantly shrink. That’s because extraction levels from these wells peak within the first year and half they’re online. After about 18 months, their output starts to significantly decline.

That’s why Moors sees WTI crude oil prices hitting $76 a barrel by the end of 2015.

“Between July and September of this year, production will finally start to decline from the wells that were recently put on line,” Moors explained. “Remember, these are the wells that have provided most of the excess volume.”

“The translation? Eventually, the glut will recede, and the market is going to hand us some highly profitable plays in short order…”

 

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The post Why WTI Crude Oil Prices Are Up After the IEA Oil Market Report appeared first on Money Morning. Reposted with permission.

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