Will Crude Oil Prices Hit $20 per Barrel?
Bearish drivers for crude oil prices
A rise in non-OPEC crude oil production in 2017 compared to 2016 would pressure crude oil prices. For more on this, read the previous part of this series. Donald Trump’s victory in the US presidential election, the strengthening dollar, rising US crude oil rigs, and high crude oil, gasoline, and distillate inventories will also pressure crude oil prices. For more on crude oil prices, read Part 1 of this series.
Finally, the all-important OPEC (Organization of the Petroleum Exporting Countries) meeting on November 30, 2016, that we’ve been looking at in this series could make a big difference in crude oil prices.
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Energy Aspects predicts that a failure to lower production at the OPEC meeting will push Brent crude oil prices down to $20 per barrel. For more on the OPEC meeting, read Part 1 and Part 4 of this series.
A Wall Street Journal survey of major banks predicts that Brent crude oil prices will average $56 per barrel in 2017, and US crude oil prices will average $54 per barrel in 2017.
Goldman Sachs (GS) expects that OPEC might succeed in its plan to cap or reduce crude oil production in its November 30 meeting. It expects US WTI (West Texas Intermediate) crude oil prices to average $55 per barrel in the first half of 2017.
The EIA (U.S. Energy Information Administration) estimates that US and Brent crude oil prices will average $50 per barrel and $51 per barrel, respectively, in 2017.
Impact on ETFs and stocks
The roller coaster ride in crude oil prices can impact oil and gas producers’ earnings, including Chevron (CVX), PDC Energy (PDCE), ConocoPhillips (COP), Cobalt International Energy (CIE), and QEP Resources (QEP).
Moves in crude oil prices also impact funds such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the Fidelity MSCI Energy ETF (FENY), the Direxion Daily Energy Bear 3X ETF (ERY), the VelocityShares 3X Inverse Crude Oil ETN (DWTI), and the SPDR S&P Oil & Gas Equipment & Services ETF (XES).
For more on crude oil prices, read Saudi Arabia: Weather Will Be a Key Demand Driver of Oil in 2H16. For more on crude oil price forecasts, read Will Crude Oil Prices Test 3 Digits Again? and Major Banks Downgrade Crude Oil Prices despite OPEC’s Deal.
For a related analysis, visit Market Realist’s Energy and Power page.