Oil prices can ‘bounce back’ to $80 per barrel

Davy Stockbrokers is forecasting a recovery and tightening in global oil prices in the second half of this year, adding that numbers can rise from the current $59 to $60 per barrel level to a long-term price of $80 per barrel.

“While the edge may have come off demand growth, the primary driver of weaker oil prices has been the relentless increase in US light tight oil or shale-based oil that requires controversial methods, such as ‘fracking’ to find] production and, to a lesser extent, sustained output from OPEC,” said Job Langbroek, Davy’s senior exploration and mining analyst in a new detailed report on the price of oil.

“We believe that US light tight oil will play the biggest role in determining oil pricing in the near future and possibly for the rest of the decade. While producing the same end product using the same industry technology, as a business model it is very different from conventional exploration and production.”