The price of oil could slump toward $20 as the fundamentals supporting it are still extremely weak and its currently only being held up by fear of inflation, Johannes Benigni, managing director at JBC Energy, told CNBC.
"People are scared of inflation, that's why they are buying oil and other commodities. But if you think about it, oil today, if you look at fundamentals, is extremely weak. So we could see prices at $20 or $30 (per barrel) … depending on where the sentiment goes," Benigni said.
New York light, sweet crude has more than doubled over the last 6 months in the wake of its massive decline from a peak above $147 a barrel.
Even though the oil price is at risk of falling sharply, Benigni thinks that it will remain supported for the meantime. One reason for the support is that investors have easy access to it as an investment instrument.
“Now the commodity markets are electronic. By going electronic, you are opening up the door for investors and investors are buying for different reasons. But the fact is you have much more money coming in,” he said.
- Watch the full interview with Johannes Benigni above.
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