Dan Eberhart, CEO of drilling services company Canary, argued on Thursday that oil will likely hit $100 a barrel before the summer driving season regardless of a potential Russian invasion of Ukraine due to macroeconomic factors and the current inflationary environment.
He did, however, warn that an invasion would impact oil and natural gas prices and will cause them to go “up, up and away.”
“Europe gets a big portion of its natural gas from Russia and we will be looking for that to go up as well,” Eberhart added.
Eberhart provided the insight on “Varney & Co.” on Thursday as U.S. stocks retreated as investors continue to monitor tensions between Russia and Ukraine, as well as the Federal Reserve’s preparation for a March rate hike.
All three of the major averages fell over 1% with the Dow Jones Industrial Average down over 400 points.
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The cost of crude oil and gas began to climb over the past month as Russia added troops to the Ukrainian border. On Thursday oil slipped below $90 per barrel.
Defense Secretary Lloyd Austin addressed reports of Ukraine and Russian-backed rebels accusing each other of violating a cease-fire after a shelling incident Thursday, stating that the U.S. is monitoring the situation.
At a NATO news conference Thursday morning, Austin said he has been concerned that Russia might try to stage a false flag operation as an excuse to invade Ukraine, but that the U.S. is not jumping to any conclusions at this time.
“We’ve seen the reports of the shelling… and they’re certainly troubling. We’re still gathering the details, but we’ve said for some time that the Russians might do something like this in order to justify a military conflict, so we’ll be watching this very closely,” Austin said.
The secretary pointed to Russian troops getting closer to the border, additional combat and support aircrafts flying in, activity in the Black Sea, and an increase in blood supplies as evidence that Russia is not withdrawing. Eberhart stressed that regardless of what happens overseas, he believes the macroeconomic factors and the inflationary environment “are going to push oil higher.”
“I would be shocked if oil doesn’t cross $100 before we hit the summer driving season,” he continued, adding that he believes “the fundamentals are that $85 or $90 are going to be more than a floor than a ceiling for oil as we move forward even independent of the Russia, Ukrainian situation.”
Inflation surged more than expected in January, notching another four-decade high as strong consumer demand and pandemic-related supply-chain snarls fueled rapid price gains that wiped out the benefits of rising wages for most Americans.
Price increases were widespread: Although energy prices rose just 0.9% in January from the previous month, they’re still up 27% from last year. Gasoline, on average, costs 40% more than it did last year.
On Thursday, the national average for gas was $3.52, eight cents higher than the day before and 98 cents more than the same time last year, according to AAA.
Eberhart slammed Biden’s energy policies on Thursday, arguing that they are “leading to higher gasoline prices.” He stressed that the Biden administration’s energy policies are “pushing the supply down” when demand is growing, causing “the price goes up.”
President Biden revoked the permit for the Keystone XL oil pipeline project on his first day in office in a series of orders aimed at combating climate change, ending a project that was expected to employ more than 11,000 Americans this year.
Biden also temporarily suspended the issuance of oil and gas permits on federal lands and waters.