Displaying items by tag: wti
Oil has been on a great run this year. Underlying crude oil, as well as ETFs like XLE, have been on fire of late, and most will have noticed the higher prices at the pump. A number of forces—like rising demand and tight supply—have been supporting the market, including OPEC lowering output. All of this has led one prominent bank, Piper Sandler, to say that oil is headed back to $100 per barrel, a level it has not seen in years. According to Craig Johnson at Piper Sandler, “I could actually see a number that could be north of 100 in the next, say, six to ... 12 months from here … To us, it looks like you could have more than 40% upside to get back to the old highs in 2018”.
FINSUM: It is worth noting that this is by far the most bullish call on the street. BAML and Goldman Sachs have their calls for this year at $67 and $75, respectively.
Unprecedented freezing temperatures across the south have wrangled most news headlines this week. This is causing a not so surprising collapse in production from the major U.S. manufacturers in the state most affected, Texas. But the lack of demand from refineries is creating a negative pull on oil prices as they are slower to adjust to changing conditions. Sluggish oil prices will be expected to continue despite a 3.5 million barrel shortfall in production because the refineries aren’t in high demand. On top of this demand shortfall, OPEC has announced plans to ramp up production. These combining factors have produced about a 2% decline in WTI crude futures after declining 1% in trading last Thursday. Finally, the Biden administration has set the course to re-engage with the 2015 Iran nuclear agreement, however, Trump-era oil sanctions have not been reversed.
FINSUM: The run-up in oil prices over the last two weeks was driven by inclement weather in the U.S. but look to the finer details of global production in the next couple of weeks to push oil prices back down. Examine related sectors, like the airline industry, to capitalize on these fluctuations.
Oil has been doing very well of late. All of our readers have probably noticed it at the pump. Brent crude is currently trading around the $80 per barrel market, and all parts of the oil sector are excited after a multi-year slump. However, the market has two big problems on its hands. The first is China’s secretive oil reserves, which could be used to push prices down if the Chinese start pushing their oil into the market. Secondly, The US oil industry wants to increase output significantly and has asked OPEC for a 1mbd hike, which would once again lead to an oversupplied market.
FINSUM: We acknowledge that oil is doing well, but we are worried it will be hard to maintain current pricing because it basically relies on an oligopoly structure (cooperation on price) which we don’t think is ultimately tenable.