WTI crude prices are likely to fall due to three key factors, and the odds of this happening in the next few months are high.
First, the slowdown in China’s economy is expected to ease oil demand. I don’t anticipate meaningful monetary support from the Chinese government to stimulate growth. China will need several years to address its high debt levels, inflated real estate prices, dependence on exports, and excessive infrastructure investments that burden future generations.
Second, in the U.S., economic discussions are shifting towards concerns about achieving a “soft landing.” Inflation is declining and nearing the Federal Reserve’s target, but the U.S. economy is facing reduced productivity. Additionally, fiscal policies are constrained by the significant national debt.
Finally, while geopolitical risks in the Middle East and Ukraine remain, I expect these conflicts to stabilize and calm down, which could further alleviate pressure on oil prices.
Considering these factors, I believe WTI crude prices could drop to as low as $50.