August WTI (West Texas Intermediate) crude oil futures fell below the key support level of $52 per barrel for the second day in a row. Gas prices have been fluctuating in a narrow range of $51 to $53 per barrel for the past eight days. The strong dollar and massive supply consensus are affecting crude oil prices.
Crude oil prices declined for the second day in a row. Increasing oil stocks at Cushing and Iran’s nuclear deal are driving WTI prices lower. The next support for crude oil prices is at $50 per barrel. Prices last tested this level in April 2015. In contrast, slowing US production and stocks could support crude oil prices. The key resistance for crude oil prices is at $55 per barrel. Prices hit this mark in July 2015.
The WTI price chart suggests that if prices break below the key support level of $50 per barrel, oil prices could hit $47 per barrel. The EIA (U.S. Energy Information Administration) forecasts that WTI could average around $55 per barrel in 2015. Goldman Sachs expects WTI to hit $45 per barrel through October 2015.
Upstream players like SM Energy (SM), Penn Virginia (PVA), and Northern Oil (NOG) are also negatively affected by declining crude oil prices. These stocks account for 5.80% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). These companies also have a crude oil production mix that’s more than 38% of their production portfolio.