It’s already a year for the record books.
U.S. crude oil, also known as West Texas Intermediate (WTI), is seeing its best start ever. According to the Oil Price Information Service’s Tom Kloza, there’s not much that could derail the rally through the second quarter.
“We’re going to see higher prices than we see right now,” the firm’s co-founder and global head of energy analysis said Thursday on CNBC’s “Futures Now.”
However, Kloza, who’s known for predicting the 2015 crude collapse, said his forecast comes with a caveat: It’ll be a more temperate and gentle year despite the robust start.
Overall, he predicted 2019 to be cheaper than last year. In 2018, the U.S. Energy Information Administration finds the average price for WTI crude was $65.06 a barrel.
“The upside is limited to about five dollars a barrel or so – which is probably not a statement you would make in February and many of the last ten years,” he added.
Crude typically sees between $15 to $20 a barrel of upside, according to Kloza. It’s different this year, he said, because oil was oversold in December. Right now, he believes it’s a balanced market for oil.
“You have a lot of refineries that are down for maintenance — and yet gasoline prices are not moving higher, demand is not moving higher, and that means lower demand for crude,” said Kloza.
On Friday, WTI crude rose 2.2 percent to close at $55.59 a barrel, a three month high. Brent, the international oil benchmark, also set a three month high.
“We’re in a Goldilocks sort of situation where the cost of finding the crude in the Permian Basin is coming down,” Kloza said, speaking of the large oil field covering parts of Texas and New Mexico.
“And, the prices, right now, for crude oil blends beyond the benchmarks, beyond and WTI, are actually off to probably their best start for a new year in 30 years,” he added.
