Supply and demand gap
The EIA (U.S. Energy Information Administration) reported that the global crude oil supply-demand gap will be ~0.7 MMbpd (million barrels per day) in 2017. However, the IEA (International Energy Agency) estimates that the global crude oil supply-demand gap will be around zero by the end of 2017. The narrowing of supply and demand in 2017 could benefit crude oil prices.
Crude oil price forecasts
Goldman Sachs forecasts that Brent crude oil prices will average $39 per barrel in 2016 and $60 per barrel in 2017. It estimates that WTI’s crude oil price forecast will average $38 per barrel in 2016 and $58 per barrel in 2017. In contrast, the National Bank of Abu Dhabi suggests that crude oil prices could test $20 per barrel if countries in the Middle East produced more to offset lower prices due to fragile economic conditions in the Middle East and North Africa region. Read How Are Oil Prices Squeezing OPEC Members’ Budgets? to learn more. Moody’s suggests that crude oil prices could hit $25 per barrel if Iran increases production in 2016. The EIA expected West Texas Intermediate and Brent crude oil prices to average ~$34 per barrel in 2016 and ~$40 per barrel in 2017.
The volatility in crude oil prices will impact oil and gas producers like QEP Resources (QEP), Synergy Resources (SYRG), WPX Energy (WPX), Oasis Petroleum (OAS), Northern Oil & Gas (NOG), and Sanchez Energy (SN). It also affects ETFs and ETNs like the iShares U.S. Oil Equipment & Services ETF (IEZ), the Direxion Daily Energy Bull 3x Shares ETF (ERX), and the VelocityShares 3x Inverse Crude Oil ETN (DWTI).
Read the next part of the series for the latest on US crude oil inventory.