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WTI Crude Oil Prices Will Stabilize Thanks to These 5 Crises

wti crude oil prices

WTI crude oil prices just touched their highest level in nearly five months.

And Money Morning Global Energy Strategist Dr. Kent Moors says prices will stabilize at current levels.

That's because there are five crises brewing that will keep prices in check throughout 2016...

The Five Geopolitical Crises Moving Oil Prices Now

oil production

WTI crude oil prices have hit the $42 to $45 target Dr. Kent Moors set for mid-June.

Now he sees five geopolitical crises emerging, and each one will have a tremendous impact on energy moving forward.

This first one, for example, could give crude an immediate jolt...

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% […]

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Saudi Arabia Threatens to Crash U.S. Markets

saudi arabia

President Obama's trip to the Saudi capital of Riyadh this week comes at an awkward time.

That's because Saudi Arabia sent a warning to the U.S. as Congress tries to pass a bill that would hold the Saudi government responsible for the Sept. 11 attacks.

And this threat targets the heart of the U.S. economy...

Saudi Arabia Debt Will Rise $113 Billion If the Country Acts on Its Threat

saudi arabia debt crisis

Low oil prices are sending Saudi Arabia debt levels to record highs.

Now, the Kingdom is issuing an even larger threat to one of its biggest competitors.

And it could send the country's economy spiraling out of control...

Why the Crude Oil Price Is Surging from the Kuwait Oil Strike

crude oil price

Both crude oil price benchmarks are on the rise again today (Tuesday, April 19).

But today's gains have nothing to do with the Doha meeting.

Here's why oil prices are up today...

Crude Oil Prices Today Crash After Failed Doha Meeting

crude oil prices today

Crude oil prices today plunged below $39 after everything the oil market feared would happen... happened.

Both WTI and Brent crude oil prices fell to their lowest level in seven sessions.

And it's all thanks to the failure of the biggest oil meeting in decades...

What's Next for Crude Oil Prices After Today's Doha Meeting

crude oil prices

The future of crude oil prices hinges on the most important oil meeting in decades today.

Anticipation for the meeting has sent oil prices on a 35% rally ever since it was announced back in February.

But investors are anxious to know how crude oil prices will perform after the meeting...

This Sunday's Doha Meeting: Expect "Psychological Stimulus"

oil prices

Don't expect a production cut from this Sunday's Doha meeting. Unlike what some analysts think, that's not what this oil meeting is about.

Instead, here's what will happen - and how it will affect oil prices...

The WTI Crude Oil Price Crash Made This Unknown Firm Over $1 Billion

wti crude oil price

Despite the 23% rebound over the last two months, the WTI crude oil price is still down over 60% since June 2014.

This plunge has caused U.S. oil companies to suffer record losses.

But there's one company that's profited $1.6 billion from the price crash...

What the Doha Meeting Really Means for Oil Prices

oil prices

The oil patch is abuzz with rumor and speculation concerning the April 17 meeting of OPEC and non-OPEC oil-producing nations in Doha, Qatar.

In fact, the markets have already reacted to the meeting, even though it hasn't happened yet; the New York-set crude benchmark West Texas Intermediate surged more than 4.5% this week, a week that saw crude head up for the most part.

But as I've said throughout oil's ongoing volatility, these days, perception and expectation in the oil markets are far more important than fundamental supply and demand. Demand is growing, and higher prices can unleash more than enough supply to meet that demand.

So, let me show you what traders are "perceiving" right now in advance of this meeting - and what that means for crude prices from here on out...

Why the WTI Crude Oil Price Is Climbing Today

wti crude oil price

The WTI crude oil price climbed higher today thanks to a bullish global supply report.

Despite today's gains, many investors are nervous about the future of oil prices.

That's because the oil market this year hinges on the outcome of this massive event...

How the Biggest Crude Oil Price Shorter in the World Is Manipulating Prices

crude oil prices

Yes, the crude oil price is in the midst of a massive rebound.

But the gains over the last two months have come from a large volume of bearish bets.

And there's one firm with the highest number of short positions in the world that aims to benefit from the oil sector's collapse...

Oil Price Prediction 2016: Prices Will Stabilize Despite 80-Year High Supply

oil price prediction 2016

Oil Price Prediction 2016: It only took 20 months, but crude oil prices finally bottomed out.

WTI crude oil prices are up 54% from their February low of $26.21.

And our new forecast shows how you can profit from their continuing rally in 2016...

Where the Oil Price "Yo-Yo" Is Heading Next

oil prices

Oil prices have been swinging up and down seemingly without reason. This volatility will continue in the short term, but the foundation for long-term price stabilization is being laid behind the scenes.

This will open up plenty of opportunities, so here's what you need to know...