Crude oil prices experienced their strongest quarterly gain since the early stages of the Ukraine war, but analysts on Wall Street are skeptical about the sustainability of the rally. While WTI crude and Brent crude showed impressive gains of +28.5% and +27.2% respectively, experts do not anticipate prices above $100 per barrel in the near future. Concerns are arising about the impact of high oil prices on demand, as J.P. Morgan analysts noted a drop in gasoline consumption and airlines reporting sales at the lower end of expectations. These factors, along with the anticipation of increased production by US producers and the potential for Saudi Arabia to tap into its spare crude capacity to lower prices, contribute to the belief that oil prices will likely hover around $90 for the rest of the year.
Despite the uncertainty surrounding the future of oil prices, the energy sector ended the week as the only positive sector in the S&P, with a 1.6% gain. The SPDR S&P Oil & Gas Exploration & Production ETF saw an increase of 17% over the quarter. Within the energy and natural resources space, the top gainers in the past five days included companies such as Ramaco Resources, Natural Gas Services Group, and Eco Wave Power Global. On the other hand, decliners like NextEra Energy Partners and TPI Composites saw significant drops in their stock prices. As speculation continues about the direction of oil prices, investors will be closely monitoring market trends and economic growth indicators in the coming months.
In summary, crude oil prices had a strong quarter, marking their best performance since the early stages of the war in Ukraine. However, Wall Street analysts are skeptical about the sustainability of the rally, with few expecting prices to stay above $100 per barrel in the near future. Concerns about the impact of high oil prices on demand are emerging, as gasoline consumption dropped and airlines reported lower-than-expected sales. Furthermore, the anticipation of increased production by US producers and the potential for Saudi Arabia to tap into its spare crude capacity to lower prices contribute to the belief that oil prices will likely hover around $90 for the remainder of the year. Despite the uncertainty, the energy sector ended the week as the only positive sector in the S&P, with the SPDR S&P Oil & Gas Exploration & Production ETF experiencing a 17% gain over the quarter. Investors will keep a close eye on market trends and economic growth indicators to gauge the future direction of oil prices.