Analysts say it’s time for oil prices to rebound

By CGTN’s Julia Sun

Oil prices slumped in the first half of this year and energy analysts predict this summer will be the turning point for the global oil market due to a rise in demand. 
2017 has not been a kind year for oil. The once-precious commodity lost roughly 20 percent of its value in the first two quarters but global supplies remained optimistic at the beginning of the third quarter. 
However, experts predict demand will rise in the short-term as the summer travel season gets underway in the northern hemisphere. 
Combined with a weaker dollar, that might help curb oil’s downfall. 
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VCG photo

“We are at an oversold situation right now. The speculative position has been reduced to its lowest level in ten months, and they will be looking for entry points right now and they'll be looking to ride this higher, say, to 47.50 in my opinion,” said Robert Yawger, director of Energy Future at Mizuho Securities USA.
A handful of brokers downgraded a batch of oil-related stocks in June, citing a dim future outlook. 
But Sam Stovall, chief investment strategist of CFRA Research, believes the current weakness in equity presented a good buying opportunity for patient investors.
“Energy stocks had been among the worst performers on a year-to-date basis. They and telecom are down double digits. Yet the expectations are that earnings for the S&P 500 (Standard & Poor's 500) energy sector are likely to be up nearly 300 percent in 2017. I think that probably for longer term investors, it might be a good time to start nibbling,” said Stovall.
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VCG photo

Nevertheless, some say the drop in output is due to one-time factors, such as tropical storm Cindy disrupting operations in the Gulf of Mexico. 
From a global perspective, oversupply remains a serious concern. 
“Our year-end target is below 50 US dollars a barrel, not only for this year, but to average below 50 US dollars for 2018. It's very hard to get a good handle on where oil prices are likely to be. Only a month or two ago, expectations were that oil would be below 50 US dollars,” said Stovall.
Experts say the next big challenge for oil will come in September when the summer driving season draws to a close. 
If oil prices can survive the relatively low demand before winter arrives, then they have a chance to finish the year on a high note.