Oil price will average US$85 in the next 12 month: Survey

Raymond James says it collected responses from 48 Canadian oil exploration and production companies between March 15 and 24. (GETTY)

Raymond James said it received responses from 48 Canadian oil exploration companies and production companies between March 15-24. (GETTY)

The West Texas Intermediate (WTI), price (CL=FAccording to Raymond James’s recent survey of Canadian oil industry executives, crude oil will average US$85 per barrel over the next 12 month.

In the last week, oil prices plunged due to market anxiety about the future of global banking after the collapse of two U.S. lenders and the merger of Credit Suisse with rival UBS. On March 20, the benchmark North American crude oil price dropped to US$64/barrel, but has since rebounded to US$74.

Raymond James reports that it received responses from 48 Canadian exploration companies and production companies between March 15-April 24. Analyst Jeremy McCrea points out that the US$85/barrel prediction for next year is 21 percent higher than the 12-month strip price US$70 at the time the survey was completed.

“When there is a significant difference in the views of the executive and the strip, it may indicate that the executives are seeing supply limitations (i.e. inability to create more supply than the financial market perceives). [rigs, technical personnel, shareholder desire, etc.]”,” he wrote to clients in a research paper.

McCrea says the survey reflects a “healthy operating outlook,” with executives calling for inflation to ease, M&A on the horizon, and a preference to reward shareholders versus spending on growth.

Also, the survey asked: “What’s a sustainable WTI price that your company can sustain long-term?” The average response was US$56/barrel.

Jeff Lagerquist works as a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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