Oil has been slumping the last couple of days but it hasn’t tempered the optimism that it’s headed to $60 a barrel.
That’s still the feeling from Auspice Capital CIO Tim Pickering, who believes that mark by year end.
He said there are several reasons why it’s headed up, including U.S. crude exports at record highs, while storage withdrawals have also been higher than expected. The fighting in Iraq is another factor.
“Prices in the near term are higher than prices further out in the future and what that does is it disincentivizes storage and it accelerates withdrawals because the prices are higher closer to the spot price,” he explained.
He added $60 a barrel will likely incentivize some companies to start drilling again.
Three years of low oil prices have slowed investment and that could lead to a price spike, since demand is on the rise, and the money going into projects hasn’t kept up.
“Companies are much more cost conscious and aware of being efficient in terms of both capital resources and human resources but I think activity is picking up and will continue to pick up,” said Pickering.
But it won’t just be companies which benefit. The province has racked up a lot of debt on the assumption oil prices would be higher.
