EIA Raises Brent Crude Oil Price Outlook By Julianne Geiger - Jul 07, 2020, 3:30 PM CDT The Energy Information Administration raised its price outlook for Brent crude to $41 per barrel for the second half of 2020—this is $4 per barrel higher than the EIA’s forecast last month.
We were in the mid-20's less than 2 months ago. The turning point was the OPEC+ cuts finally taking effect on May 1, and the lifting of the shutdowns shortly thereafter. Those same inaccurate polls had Hillary winning in a landslide back in 2016...remember? Trump was a 3-1 underdog going into the 2016 Nov election thanks to those worthless polls. Not sure if bombing Iran would help him gain votes. He just re-echoed to West Point grads last month they won't be fighting any more "endless wars." I would take the other side of that 25% (4 to 1) war bet. Trump's got much bigger problems on his hands domestically...like a depressed economy, historically high unemployment, record bankruptcies, and the perception he's mishandled the pandemic as well as the widespread civil unrest we're all witnessing. He will do whatever he can to get a rallying stock market into the election, which helps your overarching bullish stance on oil. However, the Saudis and Russians are just as unpredictable as Trump. If the lesser OPEC members (e.g. Nigeria and Iraq) continue to be non-compliant with their quotas, and if US shale production was to somehow make a strong comeback, I could see the Saudis and Russians backing out of the informal cut agreement and flooding the market again with oil in order to regain and take back market share they've lost in carrying the burden of the 10m/bpd production cut agreement. WTI was sub-$35 less than a month ago. So for 2020, seeing oil in the 20's again is just as likely as seeing $50+ oil.
Thanks for the input. Maybe you're right. These are just speculations, not many people if any really know what exactly will happen. But I'm not confident enough that we'll see those low numbers again, but am more confident that eventually, later if not sooner, it'll reach significantly higher levels as economic activity increases, maybe vaccine is found. $40 oil is still a low number assuming things return to a more normal situation. Sure, there might be some down movement and ranging, especially with 200 day moving average nearby. But as far as I can tell I think better to hold it as an investment rather than try to predict it short term or try to trade the technicals, for my situation. Easier to determine where it'll go long term then short term, and long term seems to be still significantly to the upside.
https://oilprice.com/Energy/Crude-Oil/The-Oil-Bulls-Betting-On-150-Crude.html News story about divided camp between those that say $100 or more and those that say it'll likely not get near those level. JP Morgan vs. Citi. One question seems to be if the oil industry took a business hit during the crisis so much so that it's not going to be easy for it to recover and produce. Another question seems to be whether old level of demand will ever return, or if there'll be a major shift in how much people will travel, work from home. Very sharp difference in opinion between the two camps.
Looks like the Saudis and Russians are about to ramp up production in August...probably too soon for oil bulls. I think their strategy is to keep oil prices from collapsing back into the 20's, but at the same time keep oil prices low enough (below $45/bbl) until US shale and other high cost producers are completely wiped out. https://www.marketwatch.com/story/o...-cuts-anticipating-demand-recovery-2020-07-11
Looks like they may be actively trying to start a conflict with Iran: "Israel keeps blowing up military targets in Iran, hoping to force a confrontation before Trump could be voted out in November, sources say" https://www.businessinsider.com/isr...ation-before-november-election-sources-2020-7
There is usually a decline of the Crude Oil future contract during July and August. It didn't happen yet. And, the COT shows a change in behavior of the big players last week. My chart shows an unfilled big gap and an interesting triangle pattern with hard time for bulls to fill that gap. I am convinced that the CL will go down very soon, but now I will wait for a change of trend at 38 to 37 or the gap filled. I believe it will be filled, but later this year.
WTI and Brent have not rallied along with the stock market the past few weeks. The economy is still fragile and there is more supply than ever on the market.
Why do you trade CL an not Brent? I'm looking at the Brent chart, which is similar. On this chart I see resistance at the gap between 45-46, which also happens to be the 200 day EMA. I might be interested in shorting it for a bit in that area, either as price hits it or wait for the daily close and see if we get a doji. But long term I'm still bullish on crude for the reasons mentioned before.