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Oil Prices

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Oil Prices After Brexit: Where the Market Is Headed Now

oil prices after brexit

Oil Prices After Brexit: Crude oil prices around the world are falling in the wake of the biggest event in British history.

Last night, the UK officially voted to leave the European Union.

Here's why oil prices are reeling from "the biggest single event to jolt markets in decades"...

Where Crude Oil Prices Are Headed After the Brexit Vote

crude oil prices

Crude oil prices tumbled below $50 today ahead of the big Brexit vote tomorrow.

Despite the polls showing most citizens want to stay in the EU, the numbers are often inaccurate due to undecided voters.

That means the oil price action will be exciting tomorrow as the Brexit outcome grows uncertain...

Why Crude Oil Prices Will Climb in 2016

oil pricesAccording to Money Morning experts, the oil price crash is coming to an end in 2016.

Despite crashing more than 70% since June 2014 highs, a bottom is near. Oil prices will slowly begin to climb again this year.

WTI crude oil prices have hovered near $30 per barrel through 2016 after dropping nearly 40% in 2015. Brent crude oil – priced in London – had an even worse year in 2015, falling 44.2%. In fact, 2015 was the worst year for oil prices since the financial crisis of 2008.

But Money Morning experts expect the price of crude oil to gradually climb by the end of 2016 and through 2017.

Before we get to why crude oil prices will begin rebounding, let's look at why the price of oil fell so dramatically in 2015 and through early 2016…

Why Crude Oil Prices Have Been Crashing in 2015 and 2016

A confluence of bearish factors caused the recent oil price crash.

First, global oil supply has been at an 80-year high throughout 2015 and early 2016. And these supply issues have been exacerbated by new concerns that OPEC will continue adding to the global supply glut.

Then there's demand. The International Energy Agency (IEA) released a bearish report in January 2016 stating that soaring OPEC production will keep yearly global demand growth for oil under 1.2% through the year. Cartel-wide output jumped 280,000 barrels to a total of 32.6 million last month.

"Persistent speculation about a deal between OPEC and leading non-OPEC producers to cut output appears to be just that: speculation," the IEA report stated.

Another reason for the oil price crash is slowing demand in China. China is the world's second-largest oil consumer, behind the United States.

The China demand problem became clear in November when oil imports in China fell by 218,000 barrels per day to 20-month low. Overall demand that month hit 732,000 barrels per day – down 9.9% from the same month in 2014.

A third major reason that crude oil prices have been falling in 2016 is the lifted Iran sanctions.

On Jan. 16, the International Atomic Energy Agency (IAEA) confirmed Iran has scaled back its nuclear research – complying with the terms of the nuclear deal struck last July. The terms included reducing its uranium stockpile to 300 kilos or less and allowing IAEA spot inspections of Iranian nuclear sites.

In exchange for reducing nuclear activity, the UN will lift sanctions that target Iran's defense, shipping, and most importantly, oil industries. The OPEC country will now be allowed to ramp up oil exports, which analysts believe will add up to 500,000 barrels of oil a day to the already oversupplied market.

While those three major incidents have all contributed to a global oil price crash, Money Morning Global Energy Strategist Kent Moors says that oil prices have found a floor. And he sees oil prices climbing through 2016 and 2017. Here's how much…

Expect Crude Oil Prices to Climb in 2016 and 2017

While oversupply and falling demand in China have been major contributors to falling oil prices, Moors points out that global oil demand continues to rise at a steady rate.

The U.S. Energy Information Administration (EIA) expects global consumption to rise from 93.8 million barrels a day last year to 95 million this year. And the agency also expects that number to hit 96.5 million through 2017 – marking a 2.9% increase from 2015.

This long-term demand growth will reduce the worldwide glut and raise prices to the $70 range by next year.

While demand rises, output is also expected to drop this year.

You see, the average oil well produces most of its volume within the first 18 months it is online. The majority of U.S. oil wells are now starting to see a drop off in production. That makes sense considering the oil price crash has been going on for about 18 months.

"The U.S. rig count has declined precipitously… that can't help but lead to a drop in supply, especially when it comes to shale or tight oil," Moors said. "It's called the decline curve and can't be finessed forever."

And there is a third reason to be bullish on crude oil prices in 2016 and 2017…

The current low oil price environment is ushering in a wave of M&A activity that will stabilize the oil sector by making it leaner and more consolidated. This will lower the number of U.S. producers and birth a new group of heavyweight companies that will strengthen prices.

"The specific objective of M&A may vary from deal to deal, but the overall goal remains the same: to streamline participation in advance of sector stabilization and the inevitable rise in raw material prices," Moors said.

In fact, we've already seen the M&A wave with the Shell-BG Group and Schlumberger-Cameron deals…

On April 8, Royal Dutch Shell Plc. (NYSE ADR: RDS.A) acquired BG Group Plc. (OTCMKTS ADR: BRGYY) for $70 billion. The deal is the largest energy merger in more than a decade and will create the world's largest producer of liquefied natural gas.

"The Shell-BG [transaction] is the first clear megamerger option crossing the oil-gas division," Moors noted back in April. "We will see more of these as the new energy balance among a widening number of energy sources kicks in."

The slow and steady price rebound will offer us strong profit opportunities in the meantime.

"We are not racing back to $100 a barrel oil," Moors said in December. "But we certainly do not need triple-digit oil to make some nice investment returns, especially in a sector that has been so oversold."

Stay tuned to Money Morning for everything you need to know about crude oil prices, crude oil price predictions, and how to invest during a low oil price environment…

Why Crude Oil Prices Will Climb in 2016

According to Money Morning experts, the oil price crash is coming to an end in 2016. Despite crashing more than 70% since June 2014 highs, a bottom is near. Oil prices will slowly begin to climb again this year. WTI crude oil prices have hovered near $30 per barrel through 2016 after dropping nearly 40% […]

Read More…

WTI Crude Oil Price Falls Today, but This Fund Is Still a Buy

wti crude oil price

Thanks to the rising dollar, the WTI crude oil price today dropped below the $50 mark.

Despite today's short-term drawback, we're recommending one investment that's sure to bring hefty returns this year.

Here's more on one of our best oil recommendations of the year...

Five Reasons Why Today's Oil Price Dip Won't Last

oil price

Crude's impressive trend upwards since February has some predicting a quick spike to $60 per barrel.

That won't happen, but the weakness in the oil price is finally drawing to a close. Here are five reasons why prices will - in fits and starts - keep rising from here...

Today's Oil Price Breaks Above $50 for First Time Since November

today’s oil price

Today's oil price pushed above $50 for the first time since November.

Both WTI and Brent crude oil prices gained more than 1%.

And it's all thanks to the confluence of three events happening in three different parts of the world...

A Barrel of WTI Crude Oil Still Costs Less Than the Actual Barrel

wti crude oil

The WTI crude oil price has seen a massive rebound since its February lows.

In fact, it has surged a whopping 85% to $48.42 a barrel.

But most investors will be surprised to hear that today's oil price is cheaper than a men's sweatshirt...

This Is How an OPEC Meeting Typically Affects Oil Prices

opec meeting

The OPEC meeting concluded today, and as expected, there was no agreement on an output ceiling.

This caused oil prices to fall roughly 1.5% in early morning trading.

But most investors don't understand that this drop isn't nearly as bad as the average decline for all meetings...

Crude Oil Prices Today Fall Below $48 Ahead of OPEC Meeting

Dow Jones Industrial Average

Crude oil prices today declined by more than 2% to below the $48 mark.

The price drop comes as investors remain anxious ahead of one of the biggest oil meetings of 2016.

Here's more on the first OPEC meeting of 2016 tomorrow - and what it means for the cartel's future...

This WTI Crude Oil Price Floor Will Yield Profits in 2016

wti crude oil price

The WTI crude oil price just hit a seven-month high of $49.40.

Despite the recent rally, investors should actually be keeping an eye on a lower oil price.

That's because this price floor will be the real source of oil profits in 2016...

Get Ready for the Cheapest Memorial Day Gas Prices in Over 10 Years

oil

We're about to see the cheapest gas prices in over a decade this Memorial Day weekend.

In fact, the whole summer could see us saving at the pump...

Why You Don't Need $50 Oil to Make a Profit

crude oil

Earlier this spring, I talked about the importance of a stable oil pricing "floor," saying it was even more important than any gains crude might make in the meantime. 

That's because establishing a floor, a price oil won't dip below, is what actually generates profit opportunities - for everyone from Exxon Mobil and Shell to investors like you.

Now, OPEC's failure yesterday in Vienna to reach an output deal sent oil sliding again, despite around three weeks of solid gains. But later in the day, news that U.S. crude stockpiles dipped below 1.4 million barrels sent prices back up into the green for the day.

So oil is essentially treading water now. Naturally, the airwaves filled with fretting pundits, all mourning crude's inability to stay above $50, an arbitrary "ceiling" predicated more on psychology (and undeclared short positions) than any market reality.

So, let them cry into their studio mics. We're much better off ignoring them - they're looking literally in the wrong direction.

Here's why oil's price floor will make you far more profits than any ceiling ever will...

[CHART] How the Crude Oil Price Affects Spending

crude oil price

The crude oil price has plummeted 55% over the last two years.

That means American consumers have been spending less at the gasoline pump.

This chart shows where Americans are spending that money they've been saving...

Warning: Don't Trust Goldman (Especially on Oil Prices)

crude oil prices

Goldman Sachs recently released a mildly bullish report on oil prices - an interesting reversal of the firm's prior bearish stance on crude.

And there are two key reasons why you should take Goldman's revised position with a grain of salt...

Why the WTI Crude Oil Price Is Up Today

wti crude oil price

The WTI crude oil price today (Monday, May 16) is on track for its highest close in six months.

The U.S. benchmark jumped more than 3% to $47.68 during midday trading.

And it's all thanks to a surprisingly bullish prediction from this Wall Street bank...