Downward trending channel
WTI (West Texas Intermediate) crude oil futures contracts for November delivery are trading close to the key resistance level of $46 per barrel. Prices have been fluctuating between $42 and $47 per barrel since last month. The consensus of the rising crude oil inventory will put pressure on crude oil prices.
Lower crude oil prices and slowing US production could benefit crude oil prices. Crude oil prices could see resistance at $50 per barrel. Prices tested this mark in August 2015. In contrast, record production from Saudi Arabia to Russia will continue to put pressure on crude oil prices. The next support for crude oil prices is seen at $38 per barrel. Prices hit this level in August 2015.
OPEC (Organizational of the Petroleum Exporting Countries) forecasts that crude oil prices could average around $80 per barrel in the long term. The Energy Ministry of Russia estimates that crude oil prices could average around $52 per barrel in 2015 and $55 per barrel in 2016. The EIA (U.S. Energy Information Administration) estimates that US crude oil prices could average $49.23 per barrel in 2015 and $53.57 per barrel in 2016.
The long-term lower crude oil prices negatively impact oil and gas producers like EOG Resources (EOG), ConocoPhillips (COP), and Anadarko Petroleum (APC). Together, they account for 10.87% of the Energy Select Sector SPDR ETF (XLE). These companies’ crude oil production mix is more than 32% of their total production.
Falling crude oil prices benefit ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO). In contrast, ETFs like the Velocity Shares 3X Long Crude ETN (UWTI) also benefit from rising crude oil prices.