Why oil could soar past $80 per barrel

With many convinced the historically low oil prices are here to stay, private wealth management firm MercBloc president Dan Dicker sees higher prices ahead.

The author of “Shale Boom, Shale Bust: The Myth of Saudi America” joined Yahoo Finance to take a look at the current dynamics of the oil market.

Last week, the International Energy Agency (IEA) said it sees $80 oil by 2020, almost double from current levels, but marking a slow ascent. Dicker is more bullish.

"$80 will bankrupt four or five countries immediately," he said. "So that's partially the reason why I think that oil cannot possibly stay down here for that long."

The International Monetary Fund (IMF) said in a report in October that if oil stays at current levels, many countries in the region will run out of cash in five years or less.

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OPEC’s decision to defend market share over cutting production to support prices has pressured oil prices and impacted U.S. shale oil names. But Dicker says that supply will come down as demand picks up.

 

"The IEA expects all the production in the United States to go down half a million barrels in next year – 500,000 barrels a day. I expect to go down a million barrels a day in 2016 and another million barrels in 2017," he said. "On top of that, I see demand increasing by another 2 million barrels over the next 2 years. So that's already a 4 million barrel swing over the next 22 months. That's going to make a difference with oil prices."

 

As for muted movement in the commodity in the wake of the Paris attacks, geogpolitical events matter less and less to the price of oil, says Dicker.

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