[Bloomberg] Rebounding after a two-year collapse, it's only this month that oil prices have pushed up past $50 a barrel, but Raymond James & Associates says this is just the beginning for higher prices.In a note to clients, analysts led by J. Marshall Adkins say West Texas Intermediate will average $80 per barrel by the end of next year -- that's higher than all but one of the 31 analysts surveyed by Bloomberg.
"Over the past few months, we've gained even more confidence that tightening global oil supply/demand dynamics will support a much higher level of oil prices in 2017," the team says. "We continue to believe that 2017 WTI oil prices will average about $30/barrel higher than current futures strip prices would indicate ."
The team went on to lay out three reasons for their bullish call, all of which are tied to global supply -- the primary factor that precipitated crude's massive decline.
Here's how the rebalancing of the global oil market will be expedited from the supply side, according to the analysts:
First, the analysts see production outside the U.S. being curbed by more than they had previously anticipated, which constitutes 400,000 fewer barrels of oil per day being produced in 2017 relative to their January estimate. In particular, they cite organic declines in China, Columbia, Angola, and Mexico as prompting this downward revision.