Crude Oil Prices near 18-Month High: What’s Next?
Crude oil prices
March WTI (West Texas Intermediate) crude oil (BNO) (XLE) (XOP) (IEZ) futures contracts rose 0.5% and were trading at $53 per barrel in electronic trade at 1:40 AM EST January 24, 2017. Crude oil prices rose due to the weak dollar. For more on crude oil and the dollar, read Part 1 of this series.
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Crude oil’s lows in the last 12 months
- record US crude oil production in 2015
- record OPEC crude oil production
- record Russian oil production
- high global crude oil and refined products inventories
As of January 23, 2017, crude oil prices rose 101.3% from their 2016 lows. Higher crude oil (IYE) (IXC) (PXI) (FENY) (SCO) prices have a positive impact on producers’ earnings such as Occidental Petroleum (OXY), QEP Resources (QEP), Synergy Resources (SYRG), and ConocoPhillips (COP).
Key bearish drivers for crude oil in 2017
- US production
- US crude oil inventories are above their five-year range
- Donald Trump’s energy policy
- OECD crude oil inventories
- rising Libyan and Nigerian crude oil production
- global crude oil supply outages
- Iran’s crude oil production
Crude oil’s highs in the last 12 months
US WTI crude oil prices settled at $54.1 per barrel on December 28, 2016—the highest since July 14, 2015. As of January 23, 2017, crude oil prices are 3% below their highs.
Key bullish drivers for crude oil 2017
- successful implementation of major oil producers’ production cut deal
- India and China’s crude oil demand
- US gasoline demand
A Reuters poll estimated that Brent and US WTI crude oil prices will average $57.01 per barrel and $55.23 per barrel in 2017, respectively. In the last part of this series, we’ll look at some crude oil price forecasts.
In the next part of the series, we’ll look at Cushing crude oil inventories and their impact on crude oil prices.