Streible thinks oil prices are at risk of hitting $60 in the near-term due to an Omicron-related demand slowdown. But that will likely prove to be a buying opportunity in front of a “long-term” rally in 2022.
“We are going to see the demand picture continue to pick up going into the [summer] driving season. Hopefully we can get this pandemic behind us. You’ll see all that pent-up travel demand really take back off again. Flights were pretty full over the holiday weekend, but we expect them to get even fuller as the capacity picks up. If you look at the supply side on crude oil, we have 432 million barrels. The five-year average is 460 million, so supplies are quite tight. We don’t expect OPEC to take any kind of reaction by picking up their supply picture. So we expect any kind of small supply shock would send prices higher. We are expecting $85 to $90 [a barrel] oil next year,” said Streible on Yahoo Finance Live.
The call comes as the bulls begin to retake the oil market despite the fast-spreading Omicron variant starting to weigh on global economic growth.
Oil prices rose to a one-month high Monday, a move that saw benchmark brent crude settle around $79 a barrel. The price of brent crude oil extended its gain on Tuesday.
The bullish move higher hasn’t extended much to the sector’s most well-known stocks, however.
Shares of Exxon and Chevron are each up about 2% in the past five trading sessions, lagging the gains in the Dow Jones Industrial Average (2.7%) and S&P 500 (3%), according to Yahoo Finance Plus data.
Oil’s recent bull move has some predicting further pain at the gas pump in 2022.
Gas price tracking outfit GasBuddy predicted in a new report on Tuesday — which it shared exclusively with CNN —that the national average price for gas will reach $3.41 a gallon in 2022 compared to $3.02 this year. GasBuddy didn’t rule out gas prices hitting $4 a gallon by the Memorial Day holiday.
“No question about it,” said Streible, on whether gas prices will march higher in 2022.