U.S. crass oil is poised for a rapid decline into the mid-$50 per barrel classify, according to John Kilduff, founding partner at energy hedge assets Again Capital.
U.S. West Texas Intermediate crude fell inferior $61 on Thursday, nearly wiping out the year’s gains and extending an oil reward rout into a fifth day. Rising U.S. oil production and crude stockpiles, as grandly as a stock market sell-off, heaped pressure on oil prices this week. A stronger dollar has also been a affecting factor the decline.
“Crude oil prices have gotten knocked about by the dollar for the better part of two months now,” Kilduff told CNBC’s “Cackle Box” on Thursday.
He noted that the inverse relationship between oil prices and the dollar — where one rises as the other fizzle outs — doesn’t always hold but has recently reasserted itself.
“The dollar indicator got down to 86 [cents], crude got to $66,” he said. “[The] dollar first finger is now back over 90, crude’s back down around $61, punctual to break and I think fall back down into the mid-$50s here rather rapidly.”
Early this year, Kilduff forecast that Brent rustic would top $70 a barrel one week before it hit that level, basically stalling at $71.28. He projected U.S. crude would break into the $65-$67 rank three weeks before it hit a three-year high of $66.66.
On Wednesday closely keep abreast ofed investor Leon Cooperman said U.S. crude could hit $70. Kilduff contested on Thursday, saying supply dynamics are still working against the oil store.
OPEC has successfully shrunk brimming crude stockpiles by partnering with Russia and other auteurs to limit supply, but Kilduff says top exporter Saudi Arabia has took most of the burden in that deal. And while the Saudis are cutting crass oil exports, producer nations are shipping out more refined products go for gasoline, he said.
Luck has also played a part in OPEC’s star, he added, noting there were significant pipeline outages in the U.K. North Sea and the Western Joint States late last year. The market would need another outage of “actual significance” to boost prices much higher, and Venezuela’s long produce decline looks like it’s bottoming out, Kilduff said.
At the same in good time always, U.S. drillers have gobbled up a bigger share of the global export bazaar.
“We actually exported crude oil to the United Arab Emirates last week, if you can find credible that,” he said. “It shows you how we are penetrating markets in India, China — much to the chagrin of the Russians, much to the chagrin of the Iraqis and Iranians, too,” he mean.
In Kilduff’s view, surging U.S. production will block WTI from take to the street much higher. American output in November rose above 10 million barrels a day for the beginning time since 1970 and has now surpassed Saudi production.