Oil has been dealt a massive blow in recent months, but Jim O'Neill, former chairman of Goldman Sachs Asset Management, predicts prices will end higher this year.
Brent oil, which started the year at $58 per barrel, fell below $50 on Wednesday for the first time since May 2009. The international benchmark traded around the $51.40 level on Thursday. Meanwhile, the U.S. benchmark, West Texas Intermediate (WTI), began the year at $55 per barrel and last traded around $49.20.
O'Neill's projection of higher oil prices by year-end is based on the five-year forward price of oil, or the amount paid for guaranteed delivery of oil five years from now.
"In my ongoing quest to become better at forecasting, I began, a few years ago, to pay attention to the five-year forward oil price as it compares to the Brent crude oil spot price, the price of a barrel of oil today," O'Neill, famous for coining the acronym BRIC (Brazil, Russia, India, and China), wrote in a post on Project Syndicate's website on Wednesday. He is currently a visiting research fellow at Brussels-based economic think tank Bruegel.