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Analysts Upgrade WTI and Brent Crude Oil Price Forecasts

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Crude oil prices 

Active WTI crude oil futures were trading above their 20-day, 50-day, 100-day, and 200-day moving averages of $67.7, $68.7, $65.9, and $61.44 per barrel, respectively, on July 2. The situation reflects the strong bullishness in oil prices. These moving average levels could support WTI crude oil prices.

WTI crude oil futures increased ~8.6% on June 25–July 2. Expectations of a drop in US crude oil inventories could support oil prices. A Reuters survey estimates that US crude oil inventories could have declined by 3.3 MMbbls (million barrels) on June 22–29. The EIA (U.S. Energy Information Administration) is scheduled to release its inventory data on July 5.

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The Vanguard Energy ETF (VDE) increased ~1.7% on June 25–July 2. VDE aims to follow the performance of an index of energy stocks. Ensco (ESV), Energen (EGN), Apergy (APY), and RSP Permian (RSPP) rose ~10.2%, ~9.5%, 9%, and ~8.4%, respectively, on June 25–July 2. These stocks were the top percentage gainers in VDE’s portfolio during this period. These stocks account for ~1.1% of VDE’s portfolio. 

Crude oil price forecasts  

On June 29, a Reuters poll showed that Brent crude oil prices would average $72.58 per barrel in 2018—1.3% higher than previous estimates. So far, Brent oil prices have averaged $71.2 per barrel in 2018.

A Reuters poll also showed that WTI crude oil prices would average $66.79 per barrel in 2018—0.5% higher than previous estimates. So far, WTI oil prices have averaged $65.5 per barrel in 2018.

WTI and Brent oil prices could average $64.53 per barrel and $71.06 per barrel in 2018, according to the EIA. Strong oil demand, a decline in Venezuela’s oil production due to chronic mismanagement, sanctions on Iran, and the unexpected supply outage in Canada and Libya could help oil prices.

Bank of America Merrill Lynch estimates that Brent crude oil prices could hit $90 per barrel by the second half of 2019.

Read Which Factors Are Driving the S&P 500 and Crude Oil in 2018? and Decoding Important Drivers for US Natural Gas Prices for crude oil and natural gas updates.

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