Oil Price Forecast - Feb 18

[dan_s]

Here is what Raymond James said a month ago:

Here is how we (RJ) see 2019 playing out for oil and gas investments:
> First, we believe that oil prices will recover slowly in early 2019 but gain steam in the back half of the year with Brent prices exiting 2019 in the $85/Bbl range for a full-year Brent average of $72/Bbl (or roughly flat with 2018).
> Second, we expect a down year in U.S. natural gas with 2019 gas prices averaging around $2.80, and thus our preference for oil-centric stocks remains intact.
> Third, bearing in mind just how beaten down energy stocks were in 2018, we think that higher-beta names should generally outperform over a 12-month timeframe.
In other words, we think 2019 is setting up to be a very good year for oil and gas investments.

Raymond James WTI oil price forecast by quarter:
2019
$52.00 for Q1
$56.00 for Q2
$65.00 for Q3
$75.00 for Q4
2020
$90.00 for Q1
$97.50 for Q2
$92.50 for Q3
$90.00 for Q4

After 2020, RJ is using $75.00 WTI for all future periods.

MY FORECAST MODELS: I have been using $45.00 in Q1 2019 and ramping to $60.00 in Q4 2019, where I keep it for all future periods. MY ACTUAL PREDICTION is that oil prices will go much higher, simply because I believe Saudi Arabia wants and needs higher oil prices to survive. Add sanctions against Iran & Venezuela + the impact of IMO 2020 Regulations to the equation and we the recipe for much higher oil prices, so Raymond James' forecast might be more accurate.

[dan_s]

Short-term technical indicators:

Oil 4-hour chart
•Crude oil is trading above the main SMAs suggesting bullish momentum in the medium-term.
•Crude oil is trading in a tight bull channel.
Oil 30-minute chart
•WTI is trading above its main SMAs suggesting bullish momentum in the short-term.
•However, the wedge pattern might see 55.40 and possibly 54.80 revisited to the downside before renewed bullish momentum resumes.
•Resistance is at $56.80 a barrel.

[dan_s]

“OPEC production cuts and U.S. sanctions on both Iran and Venezuela are limiting supply,” said Jasper Lawler, head of research at London Capital Group.

“Trade tensions which have weighed on global growth are showing signs of easing, boosting sentiment across markets and lifting oil demand prospects," Lawler explained.

Consultancy JBC Energy commented in a note that its calculations “do tell us that we are looking at the tightest (first half) crude balance in many years and, as such, a certain degree of price support does simply make sense for the time being.”

PVM Oil Associates analyst Tamas Varga warned that there are still many pending uncertainties that could have a negative impact on oil prices.

“Latest available data, however, point in the direction of a tightening market. It is not recommended to swim against the current and presently the 'oil' river is flowing north,”
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As I have been telling you in my weekly podcasts, there never was a "glut" of oil. I believe the Wall Street Gang kept using the glut word to hold down fuel prices since low fuel prices are bullish for the overall market. Remember, that the perception of even a small shortage of oil can have a BIG impact on the price of the world's most important commodity. Barring a recession, the demand for transportation fuels will increase 1.5 to 2.5 million barrels per day from Q1 to Q3. It happens every year.