Why Goldman Sachs Downgraded US and Brent Crude Oil Forecasts
Crude oil prices and moving averages
US benchmark WTI crude oil (IXC) (IYE) futures are above their 20-day moving average of $48.8 as of May 30, 2017. However, prices are below their 50-day, 100-day, and 200-day moving averages of $50.1, $52.2, and $52 per barrel as of May 30, 2017, respectively. Thus, prices could be range-bound in the short term.
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Crude oil price forecasts
Goldman Sachs revised its crude oil price forecasts after the OPEC meeting. It forecasts that WTI crude oil prices could average $52.92 per barrel in 2017, which is $1.88 per barrel lower than the previous estimates.
Goldman Sachs forecasts that Brent crude oil prices could average $55.39 per barrel in 2017, which is $1.37 per barrel lower than the previous estimates. WTI and Brent crude oil prices averaged $43.3 and $43.7 per barrel in 2016, respectively.
Goldman Sachs forecasts that US crude oil production could rise in 2017 and 2018, which could offset reduced production from the OPEC production cut deal.
Changes in production affect crude oil (UCO) (XOP) (SCO) prices. Moves in oil prices impact the earnings of oil and gas producers like Hess (HES), Comstock Resources (CRK), Northern Oil & Gas (NOG), and PDC Energy (PDCE).
Read OPEC’s Exit Strategy and Saudi Arabia’s Crude Oil Export Plan for more on crude oil prices.
For more industry analysis, visit Market Realist’s Energy and Power page.