Brent Oil Prediction 2018

Oil prices initially were supported by supply-side factors such as the conflict in Iraq and US-Iran tensions which sparked discussions of a potential drop in global supply. World oil prices are growing on the last trading day of the year on the data of the U.S. Energy Department about the weekly decline in the volume of stocks of raw materials.
U.S. West Texas Intermediate (WTI) crude futures were at $60.21 a barrel, up 0.6 percent from their last close, after hitting a June 2015 high of $60.32 earlier in the day, Brent crude futures - the international benchmark - were also up, rising 0.7 percent to $66.61 a barrel. Brent broke through $67 earlier this week for the first time since May 2015, according to Reuters.
The United States crude futures newly rose 20 cents, or 0.35%, to $57.56 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 64 cents, or 1.01%, to $64.04 a barrel on ICE Futures Europe.
Brent crude oil for this year and next and boosted its U.S. production view for 2018. The United States Energy Information Administration (EIA) on Wednesday higher its price forecasts on West Texas Intermediate. In its monthly energy outlook report, the government agency forecast WTI prices at $49.69 a barrel for this year, up 1.7% from its September forecast. For 2018, it forecast $50.57-up 2% from the former outlook. The EIA also upped its 2017 forecast on Brent crude by 2.7% to $52.43 and its 2018 outlook by 4.8% to $54.07. It diffidently lowered its U.S. crude manufacture view to 9.24 million barrels per day this year but elevated its 2018 output view by 0.8% to 9.92 million barrels a day. November WTI crude CLX7, +0.00% traded at $50.67 a barrel, down 0.5%. December Brent crude UK: lcoz7 fell 0.6% to $56.26 a barrel.
Source: http://www.stockmaster.in/brent_oil.html

 

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Either 10 years for the market to balance. Or one global event where we hit 120 a barrel. Who knows? Certainly not me. I feel like it's very hard to talk about these types of things in a meaningful way as a student with minimal knowledge. Industry experts, how can we talk about this without looking silly? genuinely curious.

“The only thing I know is that I know nothing, and i am no quite sure that i know that.” Socrates
 
Best Response

Not sure where you're getting your facts from but essentially everything you said is incorrect.

On the domestic front, although the rig count has fallen dramatically, production has not "slowed". The majority of the cuts in the count are of vertical and directional rigs which are low yield compared to the powerful horizontals. We've actually seen some increases in ouput out of the Bakken and Permian. On the international front it's almost worse. OPEC has been steadily pushing output and has absolutely zero intention of changing that.

What you're not accounting for is a) storage and b) refinery maintenance season. Storage is rising dramatically and getting nearer than ever before to capacity and refinery maintenance must go absolutely perfectly without any hiccups in order for us to avoid hitting that capacity before the summer even begins.

Also be careful with structured products like USO, watch out for the contango effect. The roll yields on that product are absolutely absurd right now. Decay is enormous.

Ultimately, if you're buying here with intention to hold for 2 years then whatever, it doesn't matter, this is essentially the "bottom" for you, but if you're trying to be more proactive with it, this isn't the spot IMO.

 

That's not a bet I'd take, the economics (or supply/demand for that matter) of sub $50 bbl oil won't play. There just isn't enough supply that can be sold sub $50 to keep prices down there for long, IMHO. With that being said, I think there will be a new normal in energy markets.

 

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