There has been wide-spread optimism over the past few months that an oil price rally is in the works. With a violent hurricane season and the threat of new sanctions against Iran, bulls have been expecting oil prices to rise. However, a scenario where oil prices break above $60 is nowhere in sight, according to experts.
A survey released by Deloitte Services showed that nearly 250 oil executives believe oil prices will stay below $60 through 2018 and beyond. Some executives stated they expect oil prices to stay below $70 a barrel for the rest of the decade.
According to the president of Facts Global Energy, there is no reason to believe a rally in oil prices will occur in the next two years. High global inventories and the United States growing less reliant on foreign oil should keep prices at bay for the next two years.
There are still global excess oil inventories throughout the world, according to the International Energy Agency. Currently, inventory is 170 million barrels above the average over the past five years. Although the number stood at 318 million barrels at the start of 2017, the current number still leaves an excess of oil worldwide.
U.S. oil production continues to grow, and forecasts show that production will continue to rise over the next several years. Additionally, technology and energy efficiency continue to reduce the demand for oil. Analysts believe there is no real reason for oil prices to significantly climb anytime soon.
The only scenario that could cause an increase in oil prices is if the U.S. imposes new sanctions on Iran, according to analysts. If new sanctions were imposed against the oil-rich nation, a dramatic cut in oil production could follow. However, a substantial oil price rally is not in works, even if the U.S. imposes sanctions, according to industry insiders.