Leader Capital believes fair value of oil to be $66 by end of Q3
July 21st, 2016
Since our last call in June, many of the supply disruptions have come back online (Canadian Wildfires, Nigerian rebels, and Western Europe's continued issues with production.) On top of this, OPEC has increased output, gasoline production is at an all-time high in the United States and rig counts have increased the most since 2013.
We are still seeing that the balance between supply and demand is near parity. We saw a sudden shift in supply in Q2. We continue to see parity within the oil markets through Q3. With Q2 now in the books, our updated model points to fair value of oil at $66/bbl by the end of the year given these new data points. The chart below details the supply and demand balance.
Please reference the appendix for data on our estimates.