NEW YORK: PIRA Energy Group, the closely watched forecaster that predicted the initial collapse in oil prices a year ago, warned on Thursday that the current market slump was setting the stage for prices to surge to $75 within two years.
Speaking at the group’s annual closed-door client seminar, Founder and Executive Chairman Gary Ross delivered a more bullish oil price outlook than the “lower for longer” theme now held by many industry executives as well as some banks such as Goldman Sachs.
“We’ll need to see $60 to $70 oil in a year’s time to bring forth the supply required for 2017-2018,” he told. PIRA expects oil to hit $70 a barrel by the end of 2016 and to trade at $75 a barrel the following year.
“The industry needs … nine months from the point where price signals someone to acquire a new rig to finally get incremental production. That signal is not there just yet.”
U.S. crude oil prices jumped nearly $2 a barrel to trade near $50 a barrel for the first time since July, further breaking out of a month-long sideways trading range. [O/R], following PIRA’s more bullish outlook.
PIRA’s outlook stands in sharp contrast to the latest forecast from Goldman Sachs, which calls for “lower for even longer” low prices that it says are required in 2016 to bring supply and demand into balance and sustain a U.S. production decline of 585,000 barrels a day next year.
