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EIA Upgrades Crude Oil Price Forecasts for 2018

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May. 10 2018, Updated 12:00 p.m. ET

Crude oil price forecasts  

The EIA released its Short-Term Energy Outlook report on May 8. The EIA reported that WTI oil prices could average $65.58 per barrel in 2018—10.5% higher than the April estimates. The EIA also estimates that Brent oil prices could average $70.68 per barrel in 2018—11.6% higher than the April estimates.

New sanctions on Iran, ongoing production cuts, and strong demand could help oil prices in 2018. However, record US oil production could weigh on oil prices in 2018.

WTI and Brent oil prices averaged $50.79 per barrel and $54.15 per barrel in 2017. A Reuters poll showed that Brent oil prices could average $67.4 per barrel in 2018. The Reuters poll added that US oil prices could average $63.23 per in 2018.

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Hedge funds  

Hedge funds’ net long positions in WTI (West Texas Intermediate) crude oil futures and options contracts trading in NYMEX and ICE decreased by 11,825 to 444,060 on April 24–May 1.

June WTI crude oil futures increased ~2.7% on May 1–8. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Energy Select Sector SPDR ETF (XLE) increased ~3.7% and ~1.6%, respectively, on May 1–8. XOP aims to follow the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. XLE aims to track the performance of the Energy Select Sector Index. Continental Resources (CLR), Whiting Petroleum (WLL), and Callon Petroleum (CPE) account for ~6% of XOP’s holdings. The stocks rose ~1%, ~10.2%, and 3.5% during the same period.

Read Federal Reserve and US Supplies Affect Crude Oil Prices and Will Reinstating Sanctions on Iran Affect US Natural Gas Futures? for the latest updates on crude oil and natural gas.

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