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Moving Averages Suggest WTI Crude Oil Could Trend Higher

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Crude oil prices 

Active WTI crude oil futures was trading above their 50-day, 100-day, and 200-day moving averages of $69.20, $67.60, and $63.30 per barrel, respectively, on July 30. These moving average suggests bullishness in oil prices. However, WTI crude oil was trading below its 20-day moving average of $70.90 per barrel on July 30.

WTI crude oil futures increased ~3.3% from July 23 to July 30. Expectations of a decline in US crude oil inventories could support oil prices. A Reuters survey estimates that US crude oil inventories could have declined by 3.15 million barrels from July 20 to July 27. The EIA is scheduled to release its inventory data on August 1.

The Energy Select Sector SPDR ETF (XLE) rose ~3.62% from July 23 to July 30. The companies in XLE develop and produce crude oil and natural gas and provide other energy-related services.

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National Oilwell Varco (NOV), Marathon Petroleum (MPC), TechnipFMC (FTI), and Phillips 66 (PSX) rose 13.1%, 11.6%, 11.5%, and 10.6%, respectively, from July 23 to July 30. These stocks were the top percentage gainers in XLE’s holdings during the same period. These stocks account for ~8.6% of XLE’s holdings.

Crude oil price forecasts

WTI and Brent oil prices could average $65.95 per barrel and $71.80 per barrel in 2018, according to the EIA. A Reuters poll showed that Brent and WTI crude oil prices could average $72.58 per barrel and $66.79 per barrel in 2018. Bank of America Merrill Lynch estimates that Brent crude oil prices could hit $90.00 per barrel by the second half of 2019.

Strong oil demand, mismanagement-driven drop in oil production in Venezuela, sanctions on Iran, and supply outages in Canada and Libya could help oil prices.

Please read Venezuela and US Crude Oil Supplies Impact Oil Prices and US Natural Gas Drivers: Record Production and Low Inventories for the latest updates on crude oil and natural gas.

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