The days of lofty oil prices are numbered and the price of Brent Crude oil is set to fall 30 percent to $80 per barrel by the end of the year, according to Robert Levitt, CEO and founder of U.S. wealth manager Levitt Capital Management.
Levitt says that increased supply of U.S. shale oil combined with the resolution of transportation issues should ease upward pressure on oil prices.
A study by PricewaterhouseCoopers (PwC) released on Friday meanwhile predicted that the global boom in shale oil production will shave up to 40 percent off oil prices by 2035 and boost global gross domestic product by 3.7 percent over the same period.
Shale oil - also known as kerogen oil - is an unconventional form of oil extracted from shale rock formations, only made possible in recent years through technological breakthroughs.
According to Levitt, the impact of increased shale oil supply has been drastically underestimated by markets.
"Oil prices are coming down and we could see them as low as $80 by the end of the year. This will not be because of an economic collapse like we saw in 2008, but because there is so much shale oil coming out of the U.S. and this phenomenon is not well understood," he told CNBC's Asia's "Squawk Box" on Thursday.
"We are going to see 300,000 barrels a day going from the North Sea to South Korea in 2013, and this is bearing in mind we didn't see any barrels prior 2011," added Levitt.
Between 2004 and 2011, the U.S. shale oil market grew at a rate of 26 percent per year, according to PwC. Growth is now expected to slow slightly, but the study estimated global production of shale oil will still contribute 14 million barrels per day towards global oil supply by 2035, roughly 12 percent of today's total global supply.
Another factor which will contribute to the reduction in the oil price will be the resolution of transportation issues, which will reduce U.S. imports of oil by the end of the year, said Levitt.
Increased U.S. oil production has put pressure on pipelines, which lack sufficient capacity to move the excess oil around. As a result refineries on the East Coast and California have had to continue to import oil from other countries.
Levitt said the U.S. infrastructure network is improving, helping to alleviate transportation concerns in the oil sector.
"Once we have all these issues straightened out. The price of oil is going to come down and that will be a great boom for the global economy," said Levitt.
Actually oil could go to 80 if the refiner situaton clears out there are many who feel that will happen. The other side is China is just growing too much and if America and Japan and others can continue to recover along with Eurpoe that oil could sette around 100. 80 dollars does not kill KOG because of the hedges but that is my fear with the projects going on that we miss about 3 months or more of not sustained growth this year and could miss peak oil prices but then of course 20 million is probably not that big of a deal in the long run if you can get up to 40,000 in one swoop by mid year.
Robert Levitt must be one important and influential dude, considering I've never heard of this person in any part of the trading world. If he says it's going to $80 I guess I'd better see if I can find out what's going to power all these vehicle by the end of the year so I can jump on that band wagon.
One point that is missed total by most is this. Increased US production and improved mileage, the switch to NG are all contributing to a rapid decline in imports. In January we sent 34 billion dollars oversea for imported oil.
What happens when that money stays home? This will create a large economic boom in the US and that will in turn help drive the world economy upwards. Think about it 400 billion stays home to be reinvested in the American economy. An economy with the cheapest energy in the world and the infrastructure to take advantage of it
Only one thing stands in the way of this boom and that is the politicians in Washington, ALL the politicans
Natural gas?- Are you kidding? You couldn't get the current administration to switch to N.G. even if you held the teleprompter and Barney Frank hostage. Not utilizing the most obvious bridge to green will be the very reason oil will stay well above $100 a barrel this summer and settle to the mid 90's at year end.
Mitchji, they certainly are enjoying the gas prices. They are at all time record highs for this time of year, average price per gallon is up now for 32 straight days. Blame goes to the EPA and all those different summer blends required
Yeah, I too can't wait for even higher taxes to kick in, just think of the Utopian high we'll all receive with less money to spend. Mediocrity does benefit the worthless. Wait till the it kicks in for your health care, mediocrity there will be a killer for sure! .....RDT
I don't know about the 2035 figures and believe only a fool would estimate that far out, but I think they are dead on for the end of the year with their thinking. I think $80 could be high too, depends on the economy, which is false at best. That's why I have been so hoping for a buyout.