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We Still Expect Oil Prices to Fall

Geopolitical issues and global demand may temporarily be pushing oil prices higher, but we don't see that as sustainable.

Preston Caldwell: Over the last several months, oil prices have steadily climbed upward and now stand at about $66/bbl WTI. This is above the Morningstar energy team's long-term forecast of $55/bbl WTI. Yet we think the factors causing oil prices to be elevated are merely temporary factors. The long-term factors which underpin our low-cost, $55/bbl oil price thesis remain as strong as ever and are substantiated by deep research our team has done.

The factors propelling prices higher in the short term include geopolitical issues such as the collapse of Venezuelan oil production due to internal political and economic chaos as well anticipation of Iranian production falling due to the reimposition of sanctions by the Trump administration.