June CMO: The Market Is Too Bearish On Oil


June 04, 2018

The price of oil climbed above $80 in May, a gain of approximately 25% over the last three months and 75% since last summer. But oil futures contracts suggest investors believe the price should retreat to $62 by 2024. We think that’s too bearish. While we agree today’s price is elevated, and is likely to retreat somewhat, we believe prices above $70 are more appropriate, but could be even higher if constraints from Iran and/or Venezuela prove long-standing. Here’s why.