Crude oil prices: Long-term trend
Crude oil prices are following the long-term bearish trend. Prices fell almost 20% in 2016, 53% in 2015, and more than 70% since June 2014. The rising dollar, rising crude oil inventory, and record supplies from OPEC[1. Organization of the Petroleum Exporting Countries] are putting pressure on crude oil prices. Prices are trading just below the key psychological mark of $30 per barrel.
Crucial support and resistance levels
Short covering and bargain hunting could push crude oil prices higher. Crude oil prices could see resistance at $40 per barrel. Prices hit this mark in November 2015. On the other hand, record oil inventory in sea and land, as well as oversupply concerns, could put pressure on oil prices. The next support for crude oil prices is seen at $25 per barrel. Prices hit this mark back in 2003.
Crude oil price forecast
Oil giant BP (BP) suggests that the current turmoil in the oil market could even push oil prices to $10 per barrel. It added that there would be volatility in the oil market in the first half of 2016. Then, the summer driving season in the US and robust demand in China could push oil prices higher. BP forecasts that crude oil prices could hit $30–$40 by the mid-2016. Then, by the end of 2016, we could see oil prices hit $50 per barrel. Société Générale suggests that oil prices could rise by 35% from current levels. Finally, Goldman Sachs suggests oil prices could recover to hit $40 per barrel by the middle of 2016.
The EIA[2. U.S. Energy Information Administration] estimates that Brent crude oil prices could average $40 per barrel in 2016 and $50 per barrel in 2017. The prices of the West Texas Intermediate crude oil could average $38.5 per barrel in 2016 and $47 per barrel in 2017.
The recent surge in oil prices likely benefits oil exploration and production companies like Continental Resources (CLR), Hess (HES), Whiting Petroleum (WLL), Devon Energy (DVN), and Apache (APA). The ups and downs in oil prices also impact ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iShares US Oil & Gas Exploration & Production ETF (IEO), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).