Publications: Notes at the Margin

Whither Prices? (January 8, 2018)


The current price level and expectations for future price increases offer a key reason for market optimism. Prices rose last week, as did the BP Prudhoe Bay Royalty Trust (BPT) share price. The latter jumped to almost $22 after trading around $20 for months. The increase lifts the projection for the WTI Cushing price. It also implies investors see higher prices for WTI Houston. Investor optimism regarding crude oil prices can likely be attributed to four factors: strong global economic growth, the oil industry's failure to replace traditional oil reserves, the collapse of Venezuelan production, and the Vienna Group’s discipline.


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