Crude Oil Prices Break the Key Support Level
Crude Oil Market: Supply and Demand Games
Downtrend channel
September WTI (West Texas Intermediate) crude oil futures contracts fell below the key support of $42 per barrel on August 17, 2015. Prices have been fluctuating within the downward trading channel for more than a month. The inventory estimates and oversupply concerns could influence crude oil prices in the crude oil market.
Key pivots
The long-term oversupply concerns and pessimistic sentiments could drag crude oil prices. The nearest support for crude oil prices is seen at $40 per barrel. Prices tested this level in January 2009. In contrast, long-term lower crude oil prices and the speculation of rising crude oil imports from India and South Korea could support WTI prices. The resistance for crude oil prices is seen at $52 per barrel. Prices hit this level in July 2015.
The crude oil price chart suggests that crude oil prices could average around $40–$50 per barrel in the near term. JPMorgan Chase estimates that crude oil prices could average around $48.50 per barrel in 2015 and $46.50 per barrel 2016.
The falling crude oil prices benefit ETFs like the ProShares Ultra Short Bloomberg Crude Oil ETF (SCO). In contrast, ETFs like the Velocity Shares 3X Long Crude ETN (UWTI) benefit from rising crude oil prices.
The roller coaster ride of crude oil prices impacts upstream producers like Pioneer Resources (PXD), Noble Energy (NBL), and Devon Energy (DVN). They account for 4.06% of the Energy Select Sector SPDR ETF (XLE). These companies’ crude oil production is greater than 41% of their total production.
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