Despite the recent commodity crush, one strategist remains bullish oncrude through the end of 2016.
Bart Melek, head of commodity strategy at TD Securities, told CNBC’s “Squawk on the Street” on Friday morning that “there’s potential for a move lower, but any trend to the downside is probably unsustainable.”
Melek is sticking to his $60-per-barrel forecast for oil despite the near-term “lower for longer trend” in the energy space.
“It’s not unusual to see price moves of that magnitude,” he explained, “very, very deep corrections usually suggest a fairly sharp recovery as well.”
The strategist added that while oil is unlikely to surge to $100 per barrel, his current forecast of $60 is very reasonable.
While some energy analysts have been suggesting that M&A will turn the tide in the beaten-down energy sector, Melek isn’t so sure.
“Much of the trigger will come from speculative investors covering the more extreme short positioning,” he said. Melek adds that this is already happening as he saw more short covering after the Department of Energy released inventory data.