Why Did the Crude Oil Market Rise despite Bearish Fundamentals?
Crude oil price trend
Crude oil prices are trading close to the key resistance level of $36 per barrel. Oil prices rallied almost 30% since the low in February 2016. However, they have fallen 68% since June 2014. The US crude oil inventory report might put pressure on crude oil prices.
Support and resistance
Profit-booking and the appreciating US dollar will continue to put pressure on crude oil prices. Oil prices could see support at $25 per barrel. Prices hit this level in 2003. On the other hand, slowing US crude oil production could benefit crude oil prices. The resistance for crude oil prices is seen at $36 per barrel. Prices hit this mark in December 2015.
Crude oil price estimates
The U.S. Energy Information Administration estimates that Brent crude oil prices could average around $38 per barrel in 2016 and $50 per barrel in 2017. WTI (West Texas Intermediate) oil prices could average $38 per barrel in 2016 and $50 per barrel in 2017. PSW Investments forecasts that crude oil prices could average $35–$45 per barrel in 2016. The International Monetary Fund estimates that crude oil prices—Intercontinental Exchange, Brent, Dubai, and WTI crude oil prices—could average $45.30 per barrel in 2020.
Upstream players like Noble Energy (NBL), Whiting Petroleum (WLL), Range Resources (RRC), Apache (APA), WPX Energy (WPX), and PDC Energy (PDCE) are influenced by the roller coaster ride of crude oil prices. It also impacts ETFs and ETNs like the iShares Global Energy ETF (IXC), the iShares U.S. Energy ETF (IYE), the iShares U.S. Oil Equipment & Services ETF (IEZ), and the VelocityShares 3x Long Crude Oil ETN (UWTI).
Browse this series on Market Realist: