Expect a 'big tug of war' in the oil market in 2024: Expert - Yahoo Finance

Expect a 'big tug of war' in the oil market in 2024: Expert

Crude prices rose Monday after BP suspended Red Sea shipments following attacks by Houthi rebels.

Despite rising geopolitical risks, Prosper Trading Academy CEO Scott Bauer told Yahoo Finance Live prices are headed below $70 per barrel.

“Demand destruction in China coupled with record U.S. production wins out in the end barring any sort of geopolitical escalation,” Bauer said.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

SEANA SMITH: So Scott, we could see more pressure here on crude prices saying a six-handle here at some point. Are we going to stay at that level? Or taking a look maybe with a longer-term view, how do you see some of the factors if we do see this return demand, or obviously the million-dollar question just in terms of an escalating conflict here in the Middle East or elsewhere, how that could then eventually drive prices higher.

SCOTT BAUER: Yeah. So I really believe that if there's an escalation, the geopolitical premium, if you will, is probably $5 to $10 a barrel. So I would look at 78 to 80, let's call it, being an absolute top, but I don't think we get back there again, unless there's something that happens.

I do think longer run here, we see this six-handle until something starts to shift out of China. Because again, we are producing more and more and more out of the Permian, that's why you're seeing companies, you know, in these big transactions, like what Oxy did last week. Not only are they producing more, but they're getting more efficient. They're doing it with less rigs. So the efficiency at what they are producing is at record levels as well.

So to me, everything is pointing to a lower price per barrel here. Obviously, you also have the weakening dollar, which has helped commodity prices because we know the dynamic there. So big tug of war, but I really believe the trajectory is on the downside.