UBS Wealth Management has released data from a research project through its Chief Investment Office (CIO), indicating that oil is estimated to recover to $55 per barrel in the next year.
These gains will follow estimations for the latter half of this year. Projections show that the price of crude oil may remain weak in the short-term due to the continuation of downward market trends.
The UBS CIO is advising investors to avoid crude oil in the meantime because the market for the first half of 2016 is oversupplied, even after the expansion of supply to 2.7 percent in 2015. According to the CIO, investors should expect low prices in the first half of this year. The rebalancing of the oil market hinges on accelerated supply curbs.
Those who take part in the market fear that the restrictions on Iranian oil exports being lifted could result in the oversupply of oil worldwide in short-term projections. Fast returns of Iranian oil drums would require the acceleration of supply curbs, which would include the increase of company defaults needed to balance out the market once again. This would keep short-term prices from falling below $25 per barrel.
