Future of Crude Oil – Neil M. Pine

 crude-oilBy NEIL M. PINE, formally a federally registered investment adviser and author of The Conscious Planet: A Vision of Sustainability, Peace & Prosperity

DOWNWARD TREND CHANNEL:

Crude oil futures contracts hit a major 5 year low of $41.35 per barrel on August 18, 2015. On August 13, it had broken down below the key support of $43 per barrel after holding above those levels for four days prior to this activity. Prices are swinging within the downward trending channel. The US oil inventory and oversupply concerns are swinging crude oil prices lower.

Crude Oil Prices Could Fall More on Inventory and Rig Count Data

Downtrend channel

September WTI (West Texas Intermediate) crude oil futures contracts hit a fresh low of $41.91 per barrel on August 13, 2015. It broke below the key support of $43 per barrel after holding above those levels for the past four days. Prices are swinging within the downward trending channel. The US oil inventory and oversupply concerns are swinging crude oil prices.

Key pivots

The lower crude oil prices are driving imports from India and South Korea. This could support crude oil prices. The long-term lower crude oil prices could also boost consumption. The key resistance for crude oil prices is seen at $52 per barrel. Prices hit this level in July 2015. In contrast, record global inventories and massive supplies could drag crude oil prices lower. The nearest support for crude oil prices is seen at $40 per barrel. Prices tested this level in January 2009.

JPMorgan Chase estimates that WTI could oil prices could average around $48.50 per barrel in 2015 and $46.50 per barrel 2016. The crude oil price chart suggests that US WTI crude oil prices could average around $40–$50 per barrel in the near term. The EIA (U.S. Energy Information Administration) estimates that WTI crude oil prices could average around $49 per barrel in 2015 and $54 per barrel in 2016.

The long-term lower crude oil prices benefit ETFs like the ProShares Ultra Short Bloomberg Crude Oil ETF (SCO). In contrast, ETFs like the Velocity Shares 3X Long Crude ETN (UWTI) benefit from rising oil prices.

The roller coaster ride of crude oil prices impacts oil and gas producers like Noble Energy (NBL), QEP Resources (QEP), and Devon Energy (DVN). They account for 3.52% of the Energy Select Sector SPDR ETF (XLE). These companies’ crude oil production mix is more than 41% of their total production.

KEY PIVOTS:

Theoretically, a strong demand for lower crude oil prices coming from India and South Korea could help support crude oil prices and boost consumption. The key resistance for crude oil prices is projected at $52 per barrel. Prices hit this level in July 2015. HOWEVER, record global inventories and massive supplies, combined with rapidly proliferating alternative energy technology could drag crude oil prices significantly lower. The nearest support for crude oil prices is seen at $40 per barrel. Prices tested this level in January 2009!

SYNOPSIS:

I strongly believe that in the short term, this critical $40 level will be tested, and inevitably, breakdown to trade at only $20 a barrel within 2 years! A new age of “Long Range” electric vehicles, and even “Air Powered” technology is about to sweep the nation! When 40 million Americans are driving a car that can go 1000 miles at 90 MPH WITHOUT STOPPING, on pumped up air, then how much will a barrel of oil be then? Mark Cuban, on the “Shark Tank” show, took $5 million, directly out of his own pocket to pay for N. American distribution rights for this very vehicle which utilizes this technology! — (Neil M. Pine)

“NO ARMY CAN WITHSTAND THE POWER OF AN IDEA WHOSE TIME HAS COME!” —(Victor Hugo) TheConsciousPlanet

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