Move over, Oil Change International and Tony Seba. Step aside, Christiana Figueres and Angela Merkel. You may have thought collapsing oil prices were driven by structural changes in the industry, or the mounting international imperative to cut carbon emissions. But consultants at Raymond James are here to tell you the oil crash over the last three years has been brought on by…fake news.
Bloomberg reports that the team of “noted oil bulls” led by analyst J. Marshall Adkins has borrowed one of Donald Trump’s pet phrases to back their belief that oil should be trading at US$65 per barrel—not struggling to break the $50-per-barrel barrier.
“The recent collapse in oil prices was triggered by a breakdown in the technical charts but fueled by the ‘negative feedback loop’ of bearish headlines that usually follow price declines,” they wrote in an investors’ note July 3. “Some oil price headlines have been misleading, or outright wrong, and they have distracted investors from what we believe is fundamentally a bullish overall picture.”
Raymond James focuses its analysis on U.S. inventories of crude oil and stockpiles of refined petroleum products, claiming that oil prices have been driven down by investors’ interpretations of the U.S. Energy Information Administration’s weekly production and inventory data.
But Bloomberg points to an inconvenient truth for Adkins and his colleagues: This is the same group of analysts who were convinced oil would hit $80 per barrel this year.
“While increasingly lonely in our bullish oil price view, we are still convinced that oil prices are on track to set cyclical highs over the next six to 12 months,” the investors’ letter stated. “We encourage our readers to stay focused on the real fundamentals and not get caught up in the day-to-day torrent of noise.”
Just days before the Raymond James letter, JWN Energy pointed to a more grounded—and probably more permanent—factor affecting oil prices: In a talk to the American Fuel and Petrochemical Manufacturers annual meeting, Wood Mackenzie analyst Andrew Shepard projected that demand for gasoline will fall by 1.7 million barrels per day by 2030.
“Gasoline demand in the U.S. will decline in response to stringent fuel efficiency standards and shifting demographics,” he said.