Crude Oil Prices Could End 2017 on a High Note

On December 8, 2017, the CFTC released its weekly “Commitment of Traders” report. The CFTC estimated that hedge funds decreased their net bullish bets on WTI crude oil (USO) (SCO) futures and options by 4,053 contracts to 392,431 contracts on November 28–December 5, 2017. However, positions rose 45% or by 121,946 contracts from the same period in 2016.

Hedge funds’ net long bets on WTI crude oil (UWT) (UCO) futures and options are at the highest level since February 2017. It suggests that hedge funds are bullish on WTI crude oil (DWT) prices.

A Reuters poll estimated that WTI crude oil (USL) prices could average $54.78 per barrel in 2018 after extending the production cuts. Previously, it was estimated that WTI crude oil prices could average $52.50 per barrel in 2018.

Likewise, a Reuters poll estimated that Brent (BNO) crude oil prices could average $58.84 per barrel in 2018. Previously, it was estimated that Brent (BNO) crude oil prices could average $55.7 per barrel in 2018.

Geopolitical tensions in Saudi Arabia, supply outages in Iraq and Libya, a possible strike in Nigeria, economic uncertainty in Venezuela, and extending the production cuts will help oil prices. Improving global crude oil demand and lower US and OECD crude oil inventories will also help oil prices. All of these factors suggest that crude oil prices could end 2017 on a high note. However, the rise in US crude oil rigs and production and a strong dollar (UUP) could cap the upside for oil prices.

The EIA will publish its monthly STEO (Short-Term Energy Outlook) report on December 12, 2017. In the previous report, it estimated that WTI (SCO) (DWT) and Brent crude oil prices could average $51.04 per barrel and $55.61 per barrel in 2018. The EIA might revise the forecast for WTI and Brent crude oil prices in this report.

Read Will Crude Oil Futures Be Range Bound or Trend Higher? and US Natural Gas Futures Could Maintain Bearish Momentum for updates on oil and gas.