Oil prices (CL=F) are trading near a 10-month high after stronger-than-expected data out of China. The recent rise in oil prices has some concerned that it may cause inflation to increase, and, as a result, force the Federal Reserve to raise rates. Commerce Street Capital CEO and President Dory Wiley says investors "almost have to be bullish" on oil prices for the next few years due to long-term supply issues. "What's kept oil prices down has been the expectation of a recession that hasn't shown up," Wiley says. Wiley explains that he thinks "the market's kind of had it wrong and that its overestimated a demand problem that really hasn't manifested itself, so I think you'll continue to see oil rise above the $100 barrel range."
Video Transcript
- We're watching oil after it hits 10-month highs after stronger-than-expected data out of China. Now industrial production and retail sales jumping above expectations. We were discussing the retail sales part of that in the world's second-largest economy, though, separately here. As we think about that, what should investors expect from the energy sector moving forward?
DORY WILEY: I think if you look at difficult-- you know, energy is extremely difficult to forecast, but we have long-term supply issues that are still built up into the market. So I really do think you just almost have to be bullish over the next two to three to five years. Short term is always difficult to forecast. But what's kept oil prices down has been the expectation of a recession that hasn't shown up, right? And so this decrease in demand for oil that was supposed to offset these long-term supply issues just has not materialized.
- So is your expectation that, you know, OPEC+ plus maintains these supply cuts? Or you think that sort of the demand picture really becomes the driver in the months ahead, particularly considering what's happening in China?
DORY WILEY: The long-term driver is the supply side. The short-term driver is demand, right, because that's anticipating what the market's going to do. But I think the market's kind of had it wrong in that it's overestimated a demand problem that really hasn't manifested itself. So I think you'll continue to see oil rise above the $100 a barrel range.
- And then as we're taking a look at WTI and Brent here on the screen for our viewers here. If that does rise above the $100 a barrel range, how does that trickle through to the consumer and their purchase decisions and not just how much they've already had to weather over the course of 2022? I mean, it kind of places us back into that same mind frame but at a time where they're already perhaps bending, not necessarily breaking, even in some of the necessities purchases as well.
DORY WILEY: Well, it's got to affect them, right? I mean, cars are expensive. Gas is expensive. Not everyone can afford it. If you live in California where the gas is twice as expensive as it is everywhere else, you know, that's got to slow you down. It's got to hurt that economy.
So I just-- I think it's going to be a negative effect on a lot of part of the country and the consumer, and it will add to the pressure that they're already under. And the Fed's done a good job. People haven't given them enough credit. They've been trying to engineer a soft landing, and, you know, it's amazing how the economy has hung in there and the consumer, particularly, has hung in there with 500 basis point rate hike to stop and breathe next week, which they probably will given the odds that are in the market right now. That's fine. But, you know, with all the positive things about them hanging in there, I could see them raising rates maybe one more time before year end.
- Is this the-- is this the reminder that consumers needed, though, that the Fed does not control energy, does not control oil but still has to try and figure out and maneuver and run the calculus for some type of soft landing?
DORY WILEY: Well, you bring up a really good thing. People would like to get mad at the Fed. You know, hey, they're causing a recession and this, that, and the other. No, they're just a small cog in the wheel here trying to influence the market. You know, they'd be better off getting mad at Congress for spending all that money, which the Fed can't control, right? That's where a lot of inflationary pressure comes from. They're just doing their best to try to deal with the data that they have and to engineer a soft landing, so there's no reason to be mad at the Fed.
But the consumer's done a pretty good job. I've just been amazed at how resilient it was. I thought we'd have more pressure on the market coming into the end of this year. But, you know, looking at the VX, it's a risk on, and the GDP forecast-- the Atlanta GDP was above 6 forecasts, and now it's down to 5.6. It may come down a little bit more, but that's still a very strong GDP growth number
"oil" - Google News
September 16, 2023 at 05:02AM
https://ift.tt/8QHf7VD
Why oil could rise above $100 a barrel - Yahoo Finance
"oil" - Google News
https://ift.tt/G5drQj2
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Why oil could rise above $100 a barrel - Yahoo Finance"
Post a Comment