Outlook on Oil Prices as the U.S. Is Set to Become the World’s Largest Oil Producer

Where Are Oil Markets Heading?

For much of 2016 and 2017, oil prices traded in a tight range with a ceiling near $54 per barrel. But that changed late last year, with oil prices breaking out to the upside and in January 2018, oil prices broke above $66 per barrel. Where are oil prices heading? According to the International Energy Agency (IEA), the U.S. will become the world’s largest oil producer in 2019.1 Will U.S. oil flood the market and damped prices or will demand remain strong with prices rallying higher?

The U.S. is set to overtake Saudi Arabia and is poised to pass Russia as the world’s biggest oil producer in 2019, maybe even this year.

The oil crash in 2014 forced U.S. oil companies to cut costs and become more efficient. Now that oil prices have rebounded, U.S. oil producers are drilling more wells and production is rising. It is expected that U.S. oil producers will pump an extra one million barrels of oil per day this year compared to their 2017 average of 9.3 million barrels per day.2

America’s booming shale production is keeping the market well supplied right now. But soaring demand and a lack of major conventional projects is expected to lead to a spike in oil prices. The question is, will it be a short- or medium-term hike?

Some analysts think a supply gap could send U.S. oil prices above $70 per barrel with strong demand coming from China and India. The last time crude was at $70 per barrel was back in November 2015.

Gary Ross, an oil bull and the global head of oil analytics and chief energy economist at S&P Global Platts said, “Pressure is going to build on crude prices. We’re not feeling it now, but we will.”

Not everyone is quite as bullish on crude as Ross. Ed Morse, global head of commodities research at Citigroup has predicted that “2018 could turn out to look a lot like 2014—a year that started with very high prices and ended at very low prices.”3

As a result, Citigroup believes oil prices will top out in the high $50s this summer.

For his part, Gary Ross maintains that OPEC has depleted oil stockpiles and, in sharp contrast to the IEA, he doesn’t expect U.S. oil production to increase all that much in 2018 compared to 2017.

As a result, some countries looking to buy crude will have to pay higher prices this year to get their hands on it.

“The world is going to be short come peak season,” he said. “When the music stops, someone’s not going to have a seat.”

Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses

A lot of smart oil analysts are predicting wildly different crude oil forecasts for 2018. Not everyone can be right. If demand remains strong oil prices will follow in step; should the global economy stumble, oil prices could tumble. Despite the obvious pitfall, the professional traders at Learn-To-Trade.com can help investors profit off bullish and bearish opinions.

Learn-To-Trade.com is Canada’s oldest and leading provider of stock market trading courses and can teach investors of every skill level how to trade more confidently and profit consistently.

Those who take Learn-To-Trade.com’s stock market trading courses will learn about technical analysis, market trends, commodities, futures, blockchain, Forex trading, foreign markets, and stock index trading. You will also learn about risk management and capital preservation.

At Learn-To-Trade.com we also understand that no two investors are alike; that’s why we provide a unique, Lifetime Membership that allows you to re-attend any part of the program as often as you’d like.

To learn more about Learn-To-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.

Sources:

  1. “OMR: History repeating itself?” International Energy Agency, February 13, 2018; https://www.iea.org/newsroom/news/2018/february/omr-history-repeating-itself.html.
  2. “What Could Send Oil Above $70 a Barrel: Climbing China, India Demand,” Wall Street Journal, March 7, 2018; https://blogs.wsj.com/moneybeat/2018/03/07/what-could-send-oil-above-70-a-barrel-climbing-china-india-demand/.
  3. “Deja Vu: Oil Investors Could Relive 2014’s Swings,” Wall Street Journal, February 2, 2018; https://blogs.wsj.com/moneybeat/2018/02/02/deja-vu-oil-investors-could-relive-2014s-swings/.

Photo Credit: iStock.com/bluebay2014

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George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

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