(Bloomberg) -- Oil prices are likely to fall below $80 a barrel even with OPEC’s recent apparent efforts to support that level with unexpected cuts, according to Ed Morse, global head of commodities research at CitiGroup.
China’s long-awaited recovery has been slower than expected, while the prospect of economic slowdowns in the West is crippling demand, he said. “We’re waiting to see what’s really happening with the economy, but it is a slower recovery,” said Morse in an interview with Bloomberg Television. “If anything, that will be an end-of-year phenomenon.”
Furthermore, investors may be underestimating how much production growth may come out of Iraq and Venezuela, potentially offsetting some of the cuts that the Organization of Petroleum Exporting Countries and its allies agreed to this month. The surprise announcement sent oil surging the most this year and demonstrated to markets Saudi Arabia’s commitment to supporting the price.
--With assistance from Kriti Gupta and Jon Erlichman.
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