Crude oil price trend
Crude oil prices have rallied 23% since hitting February 2016 lows. However, crude oil prices have fallen ~17% in 2016. They have also fallen almost 70% since June 2014. Refined products demand and the new crude oil production freeze have been driving crude oil prices.
Bulls and bears
Bearish traders suggest record-high crude oil inventory both on land and at sea, combined with long-term oversupply concerns, will drag crude oil prices lower. Crude oil prices could see support at $25 per barrel. Prices hit this mark in 2003. On the other hand, slowing US crude oil production could benefit crude oil prices. The next resistance level for crude oil prices is $37 per barrel. Prices tested this mark in November 2015.
Medium- and long-term crude oil price forecasts
The IMF (International Monetary Fund) estimates that crude oil prices (Intercontinental Exchange Brent, Dubai, and WTI [West Texas Intermediate] crude oil prices) could average $45.30 per barrel in 2020. PSW Investments forecasts that crude oil prices could average between $35 and $45 per barrel in 2016. The U.S. Energy Information Administration estimates 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. The National Bank of Abu Dhabi suggests that crude oil prices could test $20 per barrel in the short term due to fragile economic conditions in the MENA (Middle East and North Africa) region. Read How Are Oil Prices Squeezing OPEC Members’ Budgets? to learn more.
The volatility in the crude oil market will continue to affect the profitability of oil producers like BP (BP), Whiting Petroleum (WLL), Range Resources (RRC), PetroChina (PTR), Petróleo Brasileiro Petrobras (PBR), and Apache (APA) in both the short and long terms. The volatility also influences ETFs and ETNs such as the iShares Global Energy ETF (IXC), the iShares U.S. Energy ETF (IYE), the iShares U.S. Oil Equipment & Services ETF (IEZ), 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.