Will Crude Oil Prices Test $80 per Barrel?



Crude oil prices could rise 

The International Energy Agency estimates that the global oversupply of crude oil will diminish in 2016. Read Will Crude Oil’s Supply and Demand Balance Narrow or Widen? to learn more. Goldman Sachs (GS) also expects the supply and demand gap to narrow due to supply outages in 2016.

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Crude oil price forecast 

Raymond James & Associates estimates that WTI (West Texas Intermediate) crude oil prices will average $80 per barrel by the end of 2017. Slowing US crude oil production and recent supply outages would support crude oil prices. The decline in crude oil production in China, Columbia, Angola, and Mexico will also support crude oil prices in 2016 and 2017.

Banks like Standard Chartered and SEB Bank forecast that Brent crude oil will hit $60 before the end of 2016. Goldman Sachs forecast that Brent crude oil prices could trade around $50 per barrel in 2H16 due to recent supply outages. In contrast, BNP Paribas predicts that Brent crude oil prices could trade between $35 and $40 per barrel in 2016 due to a stronger dollar, oversupply, and near-record US crude oil inventories.

The U.S. Energy Information Administration estimates that Brent crude oil prices will average $40.52 per barrel in 2016 and $50.65 per barrel in 2017. US benchmark WTI crude oil prices are expected to average $40.32 per barrel in 2016 and $50.65 in 2017.

Volatility in crude oil prices impacts oil and gas producers like Synergy Resources (SYRG), Range Resources (RRC), Stone Energy (SGY), and Sanchez Energy (SN). It also impacts ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil (SCO) and the PowerShares DWA Energy Momentum ETF (PXI).

For related analysis, visit Market Realist’s Energy and Power page.


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