At a time when the price of oil came close to the support line near $47 per barrel, it was suggested that if the price breaks through the support, it will continue to move downward. And so, it happened, however, this movement was interrupted once again by the dollar index, which was rushing down and on Thursday, WTI-grade oil undertook a re-test of the bottom line below.
Despite the upcoming hurricane season, oil continues to trend sideways, moving toward a decline. As a rule, oil prices tend to rise during hurricane season. However in today's situation, the market is more likely to lower the prices than to increase them.
In such situations, it is necessary to present a global picture of the oil market and to recall how events have developed in the past.
After oil rushed from it's high to around $35 per barrel, many analysts predicted the ruin of oil shale companies in the US and as a result, a recovery in prices.
Events have indeed developed in this vein. Many companies went bankrupt, but those that managed to significantly reduce their cost of production, began to increase their production of shale oil. Currently, the United States is the world leader in the shale oil. 2/3 of all oil is extracted in the US from shale sources and the extracted volumes are more than 6 million barrels per day. The conclusion: random players have left and the strong have stayed and continue to increase production volumes, steadily reducing the cost price. On the one hand, in 2017, oil reserves are falling at a significant pace while oil reserves are still high by historical standards.
If WTI oil prices drop below $45 for a barrel, OPEC will have to intervene and convene an unscheduled meeting where at the very least they will have to conduct verbal intervention.
Most likely, in the coming months the global oil market will not change. The most likely scenarios are that the price of WTI will remain in the $43-to-$-50 price range. When approaching the lower boundary, it is advisable to buy and when prices near $50, to sell.
Which stock should you buy in your very next trade?
With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Unsure where to invest next? Get access to our proven portfolios and discover high-potential opportunities.
In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record.
With portfolios tailored for Dow stocks, S&P stocks, Tech stocks, and Mid Cap stocks, you can explore various wealth-building strategies.
