December WTI (West Texas Intermediate) crude oil futures fell for the fourth time in the last five trading sessions. Prices are marching towards the nearest support level within the price channel. Oil prices have been trading within the price channel for more than a month. The slowing US production and inventory data have been driving crude oil prices.
Key support and resistance
The appreciating US dollar and long-term oversupply concerns will drag crude oil prices lower. Crude oil prices could see support at $38 per barrel. Prices tested this mark in August 2015. In contrast, slowing US production and rising demand from Asia could support crude oil prices. Crude oil prices could see resistance at $52 per barrel. Prices hit this mark in July 2015.
Oil price forecast
OPEC (Organization of the Petroleum Exporting Countries) expects crude oil prices to hit $80 per barrel in the long term. Goldman Sachs (GS) and Citigroup (C) expect crude prices to trade lower due to oversupply concerns. In its recent report, the World Bank reported that crude oil prices could average $52 per barrel in 2015. 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 long-term downward trend of crude oil prices impacts crude oil producers like Chevron (CVX), Swift Energy (SFY), Energy XXI (EXXI), ConocoPhillips (COP), and Marathon Oil (MRO). They also negatively influence ETFs like the Vanguard Energy ETF (VDE). In contrast, ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO) benefit from falling crude oil prices.