Why This Trader Is Betting On Oil Touching $100 By First Half Of 2016

After rallying for around three weeks, oil has again started to fall, trading below the $50 per barrel mark. While some analysts are predicting it to go as low as $10 soon, commodities trader and Money.net CEO Morgan Downey is of the view that oil will soon rebound to $75 and will be back at $100 by the first half of 2016.

Downey was on CNBC Monday to explain the reasons behind his bullishness on oil.

Why Do You Think Oil Will Move Higher?

“The three factors that took oil from $100 down to $45 have all been removed from the market now,” Downey replied. “Those three factors were: there was a slowdown in demand growth globally; there was an increase in Libyan supply, a huge increase in Libyan supply in August last year; and there was the U.S. oil supply was growing at 1.5 million barrels per day.”

He continued, “All of those factors have now been removed from the oil market, such that by the end of second half of this year, oil should be back over $75 and the physical market has corrected itself. And enough supply is being removed from the markets to support the rally here.”

Related Link: Energy Expert: Low Oil Is An 'Economic Act Of War'

Saudi Arabia's Perspective Not The Ultimate Perspective

When asked to respond to the comment made by Prince Al-Waleed bin Talal that the days of $100 oil are over, Downey replied that he is still confident oil will move higher.

“Obviously, he is a Saudi citizen, but I am a U.S. citizen; the U.S. is now a very large oil producer as well,” Downey said. “If you look at the fundamentals, supply and demand and inventory changes, how much oil is going to storage tanks?

“The oil market is now heading toward a very balanced situation where supply has been cut by enough that it has matched the decrease in demand. And so if you look at hard numbers – the raw data – it shows a balanced market, which means that we are going to see an increase in prices from here up to $75 by the second half of this year and then potentially again over $100 in the first half of 2016.”