Sheraz Mian and Tracey Ryniec discuss where crude is headed for the second half of the year.

Welcome to Episode #42 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Sheraz Mian, Zacks Director of Research and a former oil analyst, to discuss Goldman Sachs’ recent paper on where crude is headed over the next year.

They also discuss the so-called “gloom and doomers” who are still predicting crude as low as $20 even though the US rig count is near a modern day low.

Goldman is now predicting that crude will be range-bound between $45 to $50 through the middle of 2017.

But what are the risks?

How Oil Prices Could Go Lower:

1. If Nigeria and Libya, which have had supply disruptions, can boost production by the second half

2. If there is a global slowdown, especially within China

It appears, for now, that the energy sector has bottomed. United Rentals (URI), the largest rental equipment maker in the United States, said that it believes that energy has hit a bottom but it not seeing an upturn.

Tracey and Sheraz also consider what will happen when prices actually do rise.

If prices breach $50 a barrel, will US producers suddenly jump back into drilling and create yet another crude glut?

They discuss numerous reasons why that scenario is unlikely including the hiring patterns at companies like Schlumberger (SLB), Halliburton (HAL) and Oil States International (OIS), which has cut 40% of its workforce.

United Rentals: https://www.zacks.com/stock/quote/URI?cid=cs-soundcloud-ft-pod

Oil States International: https://www.zacks.com/stock/quote/OIS?cid=cs-soundcloud-ft-pod

Halliburton: https://www.zacks.com/stock/quote/HAL?cid=cs-soundcloud-ft-pod

Schlumberger: https://www.zacks.com/stock/quote/SLB?cid=cs-soundcloud-ft-pod

Goldman Sachs: https://www.zacks.com/stock/quote/GS?cid=cs-soundcloud-ft-pod

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