Oil prices will soar to $120–150 - Continental Resources

Oil bulls are now being joined by hedge funds.

Without exploring its deposits, oil prices are expected to increase to a range of $120–150 per barrel.

Global economic growth is threatened by the increase in prices.

The attractiveness of investing in alternative energy sources can be heightened by excessively high prices.

Hedge funds have raised their bullish positions on oil to the highest level since February 2022, prior to the beginning of the Russia-Ukraine conflict, as prices have gone up and volatility has decreased, according to Bloomberg. Volatility is now at its lowest point in two years.

As Friday approaches, China is getting ready for the Golden Week holiday, which is expected to increase the demand for jet fuel in the largest oil importer. The holiday will be longer than usual.

Doug Lawler, the head of the American oil and gas company Continental Resources, has warned that if the US government does not encourage exploration of its deposits, oil prices will rise to $120–150 per barrel. This is due to the fact that oil production in the Permian Basin will eventually peak, just as it has already happened in other Bakken and Eagle Ford shale fields. Lawler believes that it is necessary to commission new fields in order to prevent this.

Bloomberg reports that the rapid increase in prices could lead to a decrease in consumer spending, which would consequently have a negative effect on global economic growth. However, it would also result in larger profits for major manufacturers.

According to estimates from the International Energy Agency (IEA), global oil consumption in June hit an all-time high of 103 million barrels per day, suggesting that humanity has not made much progress in transitioning to renewable energy sources.

Excessively high prices can have a negative effect on demand and make investing in alternative energy sources such as solar and wind more attractive.

ING suggested that OPEC+ may be subject to geopolitical pressure in 2024 that will necessitate an increase in supply. This is due to the fact that the US and India will be holding elections in 2021, and their respective governments will be sensitive to how voters respond to the cost of gasoline.

In the US, the average price of a gallon of gasoline last week was $3.88, a 25% increase from the beginning of the year. This August surge caused the biggest rise in consumer prices in over a year.

At a press conference following the Federal Reserve's meeting last Wednesday, Chairman Jerome Powell referred to the surge in energy prices as an "important development," noting that it "could have an effect on consumer spending."