Energy pro predicts that Brent crude oil price could crash by 16%

on Jun 1, 2023
  • Brent crude oil price has plunged by over 27% from its highest point in 2022.
  • Paul Sankey, a well-known analyst, predicts that oil could plunge by 16%.
  • There are concerns about Saudi Arabia and Russia's unity.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

Commodity prices are in trouble as signs of more China weakness continue. The Invesco Commodity Index has crashed to $22, the lowest level since January 22 having plunged by over 27% from the highest level during the pandemic. Brent crude oil price retreated to a low of $72.32, which is close to its December 2021 low.

Paul Sankey believes oil will slump to $60

Copy link to section

In a CNBC interview, Paul Sankey, an oil and gas pro who runs Sankey Research, warned that Brent crude oil will plunge to $60 in the coming months. Sankey is a well-known energy pro who has been covering the industry for more than 30 years.

  • Save

He cited several catalysts that could push prices much lower. First, there is the fact that the purported China recovery has become a mirage. Data published on Wednesday showed that the country’s manufacturing PMI remained in a contraction zone in May. Other numbers on trade and industrial production have been weak as well.

Further, he noted that there seem to be divisions between Russia and Saudi Arabia on supply cuts. Saudi Arabia has accused Russia of boosting production. As a result, he warned that Saudi could move back to the market share wars we experienced a few years ago. In such a war, Saudi will boost its oil production in the coming months.

  • Save

With the debt ceiling deal almost done, the next key catalyst for Brent crude oil price will be the June 4 OPEC+ meeting. This meeting is an important one since it seems like the supply cuts agreed in May have not stopped the freefall in oil prices.

Brent crude oil price forecast

Copy link to section
  • Save

Oil chart by TradingView

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

The daily chart shows that Brent crude oil price has been in a strong bearish trend in the past few months. It has formed a descending channel shown in green. The price has moved below the 50-day and 100-day exponential moving averages (EMA). It is also nearing the lower side of the descending channel.

Therefore, using trend-following principles, the price will likely continue falling as sellers target the key support at $60, which is about 16% below the current level. The bearish view will become invalid if the price jumps above $78,73, the highest point on May 25.

  • Save

Invest in commodities like Gold, Wheat, Lithium, Oil & more in minutes with our highest-rated broker, eToro.

  • Save

77% of retail CFD accounts lose money.

  • Save