Brent Crude Oil Prices Fell from 2016 Highs Again: What’s Next?
Crude oil prices could rise
Alexander Novak, minister of energy of the Russian Federation, stated that supply outstripped demand by 1.5 MMbpd (million barrels per day) in the current crude oil market. Read Non-OPEC Crude Oil Production Impacts Crude Oil Prices and Will the Crude Oil Supply and Demand Gap Narrow by Early 2017? to learn more.
Crude oil price forecast
The Russian energy ministry estimates Brent crude oil prices will trade between $40 and $50 per barrel in 2016. In contrast, BNP Paribas predicts that Brent crude oil prices could trade between $35 and $40 per barrel in 2016 due to a stronger dollar, oversupply, and near record US crude oil inventories. Meanwhile, BTU Analytics stated that if US crude oil prices traded at more than $50 per barrel, US crude oil production could stabilize and we could see US crude oil production rise more.
Goldman Sachs (GS) forecast that Brent crude oil prices could test $50 per barrel in the second half of 2016 due to recent supply outages. For more on supply outages, read Why Crude Oil Prices Rose 84% since the Lows in February 2016. The World Bank reported that Brent crude oil prices could average around $41 per barrel in 2016 compared to previous estimates of $37 per barrel.
The EIA (U.S. Energy Information Administration) estimates that Brent crude oil prices will average $40.52 per barrel in 2016 and $50.65 per barrel in 2017. US benchmark WTI (West Texas Intermediate) crude oil prices are expected to average $40.32 per barrel in 2016 and $50.65 in 2017.
The roller coaster ride in crude oil prices affects oil and gas producers such as Linn Energy (LINE), Stone Energy (SGY), Sanchez Energy (SN), PDC Energy (PDCE), and Carrizo Oil & Gas (CRZO). They also affect ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO), the PowerShares DWA Energy Momentum ETF (PXI), and the Fidelity MSCI Energy ETF (FENY).
For related analysis, you can visit Market Realist’s Energy and Power page.
Browse this series on Market Realist: