Current crude oil prices remain below $52 a barrel today (Friday). This comes at the end of a week that has seen a 3.8% drop so far.
By 10:30 a.m. today, WTI oil prices were down 0.74% to $50.78 a barrel.
Brent crude prices traveled in the opposite direction. Futures for April delivery traded up 0.22% at $60.34. Brent closed at a 2015 high on Tuesday, ending the day at $63 a barrel.
What's behind this week's fall in current crude oil prices is a new report from the Energy Information Administration (EIA). Released Thursday, the report said U.S. stockpiles reached 425.6 million barrels last week. That's a 7.7 million barrel increase from the previous week, more than double the amount projected by analysts surveyed by Platts.
But this week's drop is just more short-term volatility as oil levels off. In fact, looking at the big picture, prices have already started to stabilize...
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Despite recent pullbacks, WTI and Brent are up 6% and 19% in the last month. And according to Money Morning Global Energy Strategist Dr. Kent Moors, current crude oil prices will not continue to drop. He says they've already bottomed.
"While oil is not going to surge in the short-term," Moors explained, "oil prices should begin to level off, absent any major geopolitical tension beyond the levels we're already seeing."
Here's what will push oil higher...
Why Current Crude Oil Prices Will Return to $70 Range
Oil producers are taking measures that will tighten supply, while demand continues to rise. Together, these forces will allow the oil market to gradually correct.
The rig count is already down as companies take production offline because of low prices. Last week, Baker Hughes Inc. (NYSE: BHI) reported the number of active U.S. rigs fell by 84 to 1,056, the lowest since August 2011.
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"The reaction to the oil price decline in the U.S. has been pronounced," Moors notes. "The rig count has fallen dramatically to levels not witnessed in over a decade. In addition, operating companies are mothballing more expensive projects and trimming capital expenses."
While supply tightens up as fewer companies are producing, demand continues to climb. The International Energy Agency projects global oil demand will go from 910,000 barrels per day this year to 1.13 million in 2016.
That's why Moors sees oil hitting somewhere in the $70s by the fourth quarter of 2015.
Moors just outlined his strategies to profit from crude oil prices' rebound. Here's how you can find the sector's biggest gains.
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- MarketWatch: If History Is a Guide, Oil Could Rebound in May