Crude oil price trends
Crude oil prices are in a falling trend channel. Prices have fallen by more than 70% in the last 19 months due to oversupply concerns and the rising dollar. US crude oil prices are close to 13-year lows and are just above the key psychological mark of $25 per barrel. The consensus of rising crude oil inventory is the key catalyst for crude oil prices.
Key support and resistance levels
Long-term oversupply, the Chinese economic slowdown, and the rising US crude oil inventory could push crude oil prices to historic lows. Oil prices could see support at $25 per barrel. Prices tested this level in 2003. On the other hand, lower oil prices and bargain hunting could boost oil prices. The next resistance level is $40 per barrel. Prices tested this level in November 2015.
Oil price recovery in sight?
The latest estimates from Société Générale suggest that oil prices could rise by 35% from current levels. Goldman Sachs suggests oil prices could recover to hit $40 per barrel by the middle of 2016. Standard Chartered Bank has the most bearish estimate for crude oil, suggesting that crude oil prices could hit $10 per barrel in the worst case scenario.
The U.S. Energy Information Administration estimates that US crude oil prices could average $38.54 per barrel and $47 per barrel in 2016 and 2017, respectively. Brent crude oil prices could average $40 per barrel and $50 per barrel in 2016 and 2017, respectively. Oil prices are trading below their key moving averages. This suggests oil prices could trend lower.
Record-low oil prices affect oil exploration and production companies like Continental Resources (CLR), Hess (HES), Energy XXI (EXXI), Halcón Resources (HK), Whiting Petroleum (WLL), Devon Energy (DVN), and Apache (APA). The volatility in the oil market also impacts ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iShares U.S. Oil & Gas Exploration & Production ETF (IEO), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).