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What to Expect from Crude Oil: Upgrades and Downgrades

PART:
1 2 3 4 5 6
Part 6
What to Expect from Crude Oil: Upgrades and Downgrades PART 6 OF 6

EIA Downgraded US and Brent Crude Oil Price Forecasts

Crude oil prices and moving averages 

US crude oil (BNO) (USL) prices are near a five-month low. Prices are trading below their 20-day, 50-day, 100-day, and 200-day moving averages of $49.6, $50.4, $52.7, and $51.6 per barrel as of May 9, 2017, which suggests more downside for oil prices. For more on bearish drivers and crude oil prices read Part 1 and Part 2 of the series.

EIA Downgraded US and Brent Crude Oil Price Forecasts

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Crude oil price forecasts  

The EIA (U.S. Energy Information Administration) released its monthly STEO (Short-Term Energy Outlook) report on May 9, 2017. It estimates that US WTI crude oil prices would average $50.68 per barrel in 2017, which is 3% lower than previous estimates. It estimates that Brent crude oil prices would average $52.6 per barrel in 2017, which is 3% lower than previous estimates. US WTI and Brent crude oil prices averaged $43.3 and $43.7 per barrel in 2016, respectively.

A market survey of 32 banks shows that US crude oil prices could average $54.3 per barrel in 2017. A market survey of 35 banks shows that Brent crude oil prices could average $56.2 per barrel in 2017.

The EIA’s massive downward revision in crude oil prices could have a negative impact on oil traders’ sentiments. Moving averages and fundamental catalysts that we discussed in the previous parts of this series suggest that prices could fall more. However, a possible extension of major producers’ production cut deal in 2H17 and early 2018 could drive oil prices higher.

Volatility in crude oil (IEZ) (VDE) (SCO) prices in 2017 could have a positive impact on oil and gas producers’ earnings like Hess (HES), Sanchez Energy (SN), Matador Resources (MTDR), and SM Energy (SM). 

Read Why Hedge Funds Are Cautious about Crude Oil and Will Crude Oil Prices Test 3 Digits Again? for more on crude oil price forecasts.

Read What Can Investors Expect in the Crude Oil Market in 2017 for more on crude oil prices.

For more industry analysis, visit Market Realist’s Energy and Power page.

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