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Crude Oil’s Forward Curve Suggests Low Prices in the Long Term

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Crude oil price trend  

Crude oil prices have fallen almost 70% in the last 20 months due to long-term oversupply concerns. Lately, crude oil has been trading above the key psychological mark of $30 per barrel.

The OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC crude oil production deal and the US crude oil inventory are key catalysts for crude oil prices.

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Support and resistance 

Slowing US crude oil production could support crude oil prices. The nearest resistance level for crude oil prices is $37 per barrel. Prices tested this mark in November 2015. Long-term oversupply concerns and the slowing Chinese economy could drag crude oil prices lower. The nearest support for crude oil prices is $25 per barrel. Prices tested this mark in 2003.

Crude oil price forecast and forward curve 

PSW Investments forecasts that crude oil prices could average between $35 and $45 per barrel in 2016. The U.S. Energy Information Administration forecasts that Brent crude oil prices could average $38 per barrel in 2016 and $50 per barrel in 2017. WTI (West Texas Intermediate) oil prices could average $38 per barrel in 2016 and $50 per barrel in 2017.

Crude oil’s forward curve suggests that crude oil prices could hit $40 per barrel in 2016. They may hit $52 per barrel by the end of 2024. Oil prices could stay low if OPEC and non-OPEC countries don’t initiate crude oil production cuts by late 2016 or early 2017. For this reason, we expect oil prices to remain low until mid-2017.

Oil producers such as CONSOL Energy (CNX), Newfield Exploration (NFX), Energen (EGN), SM Energy Company (SM), and WPX Energy (WPX) are affected by the ups and downs in oil prices.

Oil prices also affect ETFs and ETNs such as the Vanguard Energy ETF (VDE), the iShares US Oil Equipment & Services ETF (IEZ), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the VelocityShares 3x Long Crude Oil ETN (UWTI).

To learn more about the recent historic crude oil production deal, read Why Crude Oil Prices Fell despite the OPEC and Non-OPEC Deal.

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