The International Energy Agency renewed concerns about a global oil glut after it said crude oversupply should continue through the end of 2016. The announcement follows the lifting of U.S. sanctions on Iran over the weekend, which experts project will add more crude to the market. Oil prices fell more than 3 percent Tuesday, settling at their lowest level since September 2003.
Despite the overwhelmingly bearish picture for the energy space, one expert maintains his view that we will see oil back above $40 by the end of the year.
"We think oil is going to go higher in the second half of the year because, even with Iran gradually increasing output, we expect the first signs of the rebalancing in the oil market," Mike Wittner said Tuesday on CNBC's "Futures Now." Crude oil has been in a precipitous decline for the last two years as supply and demand continue to drag the market lower. WTI crude is down 70 percent since January 2013.
"Following two, two and a half years of pretty much nonstop stock build, we think that we'll be balanced in the second half which will provide a change of tone in the market and provide some uplift," said Wittner, managing director and global head of oil research at Societe Generale. "I think the key driver is a steady and significant decline in U.S. production and that's really going to be the key to the market outlook."
Even with his long-term bullish outlook, however, he said that the pressure could continue in the coming days. "With sanctions lifted, I would characterize it as a wait-and-see game as Iran strives to regain market share."
Wittner expects oil to steadily trade above $40 by the second half of this year, more than 35 percent higher than its current price of under $29 a barrel.