Expect oil prices to ease as the market normalizes, says one analyst.
“More normalization in the market should allow oil to find a little lower home than maybe the $ 125 range that we have forecast in the very near term,” Wells Fargo senior equity research analyst Roger Read told Yahoo Finance Live.
“You are going to get some supply growth out there in various parts of the world including North America,” said Read. “You’re also going to see demand growth rates decelerate as we come away from the COVID recovery.”
However the release of Strategic Petroleum Reserves which began earlier this year to help ease supply crunches is expected to end in November.
“I would think prices stay elevated relative to prior periods – and not so much that we’re going to get a collapse in prices just because things normalize a little bit,” said Read.
The analyst’s team reduced its West Texas Intermediate crude (CL = F) price target for 2022 to $ 108.67.
On Tuesday, US crude futures tumbled below $ 100 per barrel amid demand concerns and a strong dollar.
Brent futures (BZ = F) also declined. Concerns of a recession and a resurgence of Covid case in China have contributed to a decline in oil prices over the last couple of weeks.
Ines is a stock market reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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