After cruising to four-year highs earlier this year, crude oil has hit the skids. Since hitting $70 a barrel for the first time since 2014 in May, prices have been range-bound, but it could soon snap out of that range, according to energy expert Robert Raymond. “We’ve sort of achieved [a recovery to the $70] level probably a little faster than we thought we would have relative to declines in Venezuela and Mexico and parts of China and so the production side of the equation has actually rolled over a little faster than we thought it would,” Raymond, investment strategist at hedge fund RCH Energy, told CNBC’s ” Futures Now ” on Thursday. Global inventories have since drawn down to border on “critical levels” as demand remains robust, explained Raymond. The Organization of Petroleum Exporting Countries’ (OPEC) spare capacity, which measures their bandwidth to ramp up production to cushion price fluctuations, is below 3 percent of total global demand. Lower spare production levels restricts how able OPEC is to respond to spiking prices. Oil companies’ re-investment and capital expenditure levels are also signaling a potential squeeze in supplies, he adds. “The industry, for the last three years, has been chronically underinvesting and continues to do so at a rate of only 60 percent of cash flow being reinvested in the form of capex,” explained Raymond. “The last time that happened [was] in 2004 and ’05 which precipitated a spike to $147 a barrel.” Oil producers tightened their belts during crude oil’s sell-offs in 2014 and 2015, in an attempt to minimize losses. Exxon Mobil , for instance, reduced its exploration expenses in 2014 by 15 percent and by another 9 percent in 2015. Crude oil’s next move also depends on how things shake out in the Trump administration’s trade disputes, the analyst said. Published in Daily Times, September 10th 2018.