Short-term crude oil price trend
Crude oil prices fell below the key psychological mark of $30 per barrel on February 19, 2016. The double bottom pattern suggests that crude oil prices could trend higher. However, bearish catalysts like the US crude oil inventory will weigh on crude oil prices in the short term.
Support and resistance
Pessimistic sentiments of oversupply and refineries returning from the maintenance season could result in a rise in crude oil supplies and stocks. This would put pressure on crude oil prices. Oil prices could test the nearest support of $25 per barrel. Prices hit this level in 2003. On the other hand, new production alliances could support crude oil prices. Oil prices could see resistance at $37 per barrel. Prices hit this level in November 2015.
Crude oil price estimates
Bank of America Merrill Lynch estimates that the crude oil production freeze strategy from Russia and Saudi Arabia could be successful if gasoline prices stay higher and US production slows down. Then, we could crude oil prices hit $47 per barrel by June 2016. In contrast, National Bank of Abu Dhabi suggests that crude oil prices could test $20 per barrel due to fragile economic conditions in the MENA (Middle East and North Africa) region. The countries in the MENA region are experiencing a current account and fiscal account deficit in 2015 and 2016. This puts them under pressure to produce more to offset lower oil prices. Read How Are Oil Prices Squeezing OPEC Members’ Budgets? to learn more.
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.
Oil producers such as CONSOL Energy (CNX), Halcon Resources (HK), ConocoPhillips (COP), Anadarko Petroleum (APC), and Noble Energy (NBL) are impacted due to lower oil prices. 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) are also influenced by the ups and downs in the oil market.
To learn more about the recent historic crude oil production deal, read Why Crude Oil Prices Fell despite the OPEC and Non-OPEC Deal.