Expect Crude Oil Prices to Cool, $80 bbl ‘Unhealthy’

Expect Crude Oil Prices to Cool, $80 bbl ‘Unhealthy’

Expect Crude Oil Prices to Cool, $80 bbl ‘Unhealthy’

$DIA, $SPY, $QQQ, $USO, $OIL, $VXX

BP (NYSE:BP) CEO Bob Dudley expects a flood of US Shale Oil, and the reopening of OPEC taps to cool the Crude Oil market after price rose above $80 bbl this week.

US President Donald Trump’s decision to exit an international nuclear deal with Iran and revive sanctions on the OPEC member country, as well as Venezuela’s plummeting output, has helped to lift Crude Oil prices to their highest since Y 2014.

But BP sees Crude Oil falling to between $50 – 65 bbl due to surging shale output and OPEC’s capacity to boost production.

“Clearly the withdrawal of the United States from the Iran nuclear deal has brought a lot of uncertainty to the market,” Mr. Dudley said in an interview.

Crude Oil exports from Iran, the 3rd-largest member of the Organization of the Petroleum Exporting Countries, could drop by 300,000 to 1-M BPD, as a result of US sanctions, the CEO said, citing internal BP forecasts.

The 30% recovery in Crude Oil prices since February has given strong tailwind to energy companies such as BP, whose profits recovered last year after a 3-year slump in the market.

The US Energy Information Administration (EIA) this month boosted its forecast of growth in domestic Crude Oil production in Y 2018 to an all-time high of 11.17-M BPD, as shale drillers accelerate activity.

The surge in US output has been offset by deep supply cuts for over a year by OPEC and other producers including Russia.

OPEC’s de facto leader, Saudi Arabia, assured Key consumers that the world would have adequate supplies even if Iran’s exports dropped sharply.

Mr. Dudley said a sustained crude price of over $80 bbl would be unhealthy.

“Two years ago, when the price was $27, it was great for global growth, the engines of the consuming economies, but it was terrible for producing countries and that led to producing countries not being able to purchase things as well. That was not a healthy price.”

“I think when you get above $80, it is not a healthy price either.”

Friday, the major US stock market indexes finished flat to unchanged at: DJIA +1.11 at 24715.09, NAS Comp -28.13 at 7354.35, S&P 500 -7.16 at 2712.97

Volume: Trade on the NYSE came in at 872-M/shares exchanged

  • NAS Comp +6.5% YTD
  • Russell 2000 +5.9% YTD
  • S&P 500 +1.5% YTD
  • DJIA Unch YTD

HeffX-LTN’s  Major US Stock Market Indexes Technical Analysis for Week ended 18 May 2018

Date Symbol Price Technical Analysis Support Resistance
18 May 2018 QQQ 167.67 Neutral (0.18) 166.37 168.96
18 May 2018 DIA 247.1 Neutral (0.19) 246.71 254.07
18 May 2018 SPY 271.61 Neutral (0.21) 271.08 274.41

Have a terrific weekend

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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