Gaurav Sharma, oil analyst at Sharecast joined Tip TV today to share his views on oil, noting that short-sellers could be getting too ahead of themselves.
$60 Brent could be optimal value.
Sharma believes that we are seeing a bit of a reversion to the norm again, with the market behaving in a somewhat predictable fashion, while other markets are losing their heads somewhat. He feels that $60 per barrel of Brent remains an optimal price target for year end.
China bid still in control
Sharma continues, adding that short sellers could be getting ahead of themselves when considering a slow down in China importation and the Iran deal. He notes that even with a significant drop in Chinese growth, they are still the biggest regional importer of oil in comparison to its biggest regional peers combined. Looking to Iran he adds that it will provide no value to the country to flood the market and force prices even lower.
Volatility ahead?
Sharma is expecting volatility ahead and believes that the supply side will suffer, with the Saudis willing to act to shake down threats to their market share. Looking to the long run, Sharma believes that a view to $100 a barrel again could be a view, especially with the OECD noting that low prices will stimulate demand, but for now he believes $60 is fair value for year end.