OPEC's Meeting: Price Wars Continue in the Global Crude Oil Market
Trading range
NYMEX-traded WTI (West Texas Intermediate) crude oil futures contracts settled below the critical level of $40 per barrel on December 4, 2015. Prices have been trading within a downward trending price channel since October 2015. OPEC’s (Organization of the Petroleum Exporting Countries) meeting in December and the US dollar have been driving crude oil prices.
Key pivots
The consensus of slowing demand from China could drag crude oil prices lower. Crude oil prices could see key support at $39 per barrel. Prices tested this level in November 2015. In contrast, slowing US production could support crude oil prices. Oil prices could see the next resistance at $48 per barrel. Prices hit this level in November 2015.
The Energy Ministry of Russia projects that crude oil prices could average around $55 per barrel in 2016. Société Generale estimates that crude oil prices could trade around $49.40 per barrel in 2016. The World Bank estimates that crude oil prices could average $52 per barrel in 2015. Barclays projects that Brent crude oil will average $60 per barrel in 2016. WTI is expected to average $56 per barrel in 2016.
The crude oil price graph suggests that prices will trade in a falling channel. The long-term lower crude oil prices will impact US upstream players like Chevron (CVX), Occidental Petroleum (OXY), Marathon Oil (MRO), Murphy Oil (MUR), and Apache (APA). They also impact ETFs like the iShares US Oil & Gas Exploration & Production ETF (IEO) and the PowerShares DWA Energy Momentum Portfolio (PXI).
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