The West Texas Intermediate crude price has climbed 27 per cent since Dec. 12 and the S&P/TSX Composite Oil and Gas Exploration and Production subindex
WTI crude oil is trading near US$87 per barrel but Mr. Woo is comfortable with his forecast of an US$80 average price for 2024. He believes that current prices are close to an equilibrium level where Saudi Arabia is happy but it’s not yet high enough to spur a supply response from the U.S. shale industry.
Downside risk for the oil price revolves around excess supply. OPEC nations have remained disciplined about production cuts but Mr. Woo reports that “intra-cartel relations remain tense the unity of the cartel hinges on Saudi Arabia’s willingness to continue shouldering the load of cuts.” Further acrimony could lead to some nations increasing oil exports to gain market share.
Prominent analyst Randy Ollenberger leads BMO Capital Markets coverage of oil and gas producers. He believes the sector remains attractively valued on average, particularly in the cases where companies are increasing returns of cash to shareholders through higher dividends or share buybacks.