NYMEX-traded WTI (West Texas Intermediate) crude oil futures contracts for January delivery are trading close to the next resistance level of $44 per barrel. Prices have been oscillating within $39 per barrel and $51 per barrel for the past three months. Lately, geopolitical tensions and short covering have been influencing crude oil prices.
Lower crude oil prices might boost consumption and benefit crude oil prices. Crude oil prices could see resistance at $48 per barrel. Prices hit this level in November 2015. In contrast, the crude oil market has been feeling the heat due to record global inventory, the appreciating dollar, and speculation of weak demand from China. All these factors could drag oil prices lower. However, geopolitical tensions are delaying the crude oil market crash. Prices could fall further as US inventories increase for the ninth straight weeks. Record inventories in China and Middle East should add to the glut.
Citigroup expects crude oil prices to hit $32 per barrel in the near term. The easing of oil sanctions in Iran means the oil market could add 1 MMbpd (million barrels per day) of crude oil. As per the EIA (U.S. Energy Information Administration), oil prices could fall by $5 per barrel to $15 per barrel as oil from Iran floods the oil market. Venezuela expects oil prices could hit $25 per barrels unless oil giants like Saudi Arabia and OPEC (the Organization of Petroleum Exporting Countries) don’t stabilize oil prices. The EIA (U.S. Energy Information Administration) estimates that US WTI oil prices could average around $50 per barrel in 2015 and $51 per barrel in 2016.