What Is The Right Price For Oil In A Balanced Market?

The price of oil is well off the low for this cycle because the OPEC + Russia plan to rebalance supply & demand has worked. Now the question is “What is the Right Price for oil in a balanced market?”

The price of West Texas Intermediate (WTI) crude oil, like the stock market, was overdue for a bit of a pullback or “correction”. After peaking at over $66/bbl on January 26, 2018 the front month NYMEX contract for WTI followed the stock market correction down to just above $59/bbl on February 13. By the close on February 16 it had rebounded back to $61.55/bbl. The fact that a key resistance level at $57.65 was not tested during the selloff is encouraging.

WTI has been moving in a strong upward channel since last summer. Right now there is strong support at $57.65 and strong resistance at $66.70. A close above $67.00 should set up a test of $75.00 sometime in the 3rd quarter. At least that’s what the “tea leaves” are telling me.

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The Most Bullish Indicator For Long-Term Oil Demand

The rise of electric vehicles has prompted many analysts to start trying to pinpoint the year in which global oil demand will peak and start to decline irreversibly in the face of electrification and improved vehicle efficiency. While forecasts range from “in a decade” to “not in your lifetime,” transportation above ground — not the ‘flying cars’ hype, but airline travel — is expected to continue to grow for decades to come.

Air carriers use a middle distillate of oil — jet fuel — and as far as demand for air travel goes, jet fuel demand will be the fastest-growing transportation fuel at least until 2050, because current forecasts by international agencies only try to predict oil demand until that date.

Click here to read the original article: https://oilprice.com/Energy/Energy-General/The-Most-Bullish-Indicator-For-Long-Term-Oil-Demand.html

Most Big Banks Are Now Bullish On Oil

This time last year, all the big banks that OPEC and Russia took by surprise a month earlier by agreeing to an oil production cut were wondering just how long the agreement would last. The overwhelming opinion was one of skepticism. The deal would break apart in a few months, analysts said, or producers would cheat as is their habit. Alternatively, some argued, U.S. shale would grow so quickly that it would offset whatever cuts OPEC, Russia, and their partners manage to deliver.

Fast forward a year, and these same banks are changing their tune as a new reality sets in: now they are scrambling over each other to issue bullish price forecasts on crude oil. Goldman Sachs was the latest to give up its skepticism and predict that Brent would reach $80 a barrel within six months. A couple of days earlier, JP Morgan had said that it expected the international benchmark to hit $78 in a few months.

 

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Goldman: Oil To Top $80 Within Six Months

Goldman Sachs has held one of the most optimistic views on the rebalancing of the oil market and oil prices in the near term, and the investment bank is now growing even more bullish, predicting that the oil market has likely balanced, and that Brent Crude will reach $82.50 a barrel within six months.

Goldman sees the price of Brent reaching $75 per barrel within three months, lifting its short-term oil price projection from the previous $62 forecast.

Click here to read the original article: https://oilprice.com/Energy/Oil-Prices/Goldman-Oil-To-Top-80-Within-Six-Months.html