The other day, oil prices exceeded the $50/b level for the first time in 6 months. Despite the rally from under $30/b all the way up to $50/b, some experts are still questioning the potential of the current bull market of crude oil. While some representatives of the international expert community see the current market bias as a stable long-term tendency, others do not share their optimism, saying that this is a temporary recovery backed by some seasonal factor and some secondary factors dominating the market at this point. In a broader scale, the market bias is still bearish and there are no fundamentals to reverse the longer-term tendency today.
Over the period of mid 2014 through early 2016, oil prices shoed the biggest drop seen over the last 10 years, down to $28 per barrel. Later on, the market started recovering slowly but surely and now we can see the prices moving above the 50-dollar threshold.
The experts say that the latest bullish momentum was triggered by the recent report released by the U.S. Department of Energy. The report indicated lower oil inventories over the reporting week. On top of that, there were secondary factors affecting the market. For instance, a conflict in Nigeria and forest fires in Canada slowed down the oil production in those countries. At the same time, some major market players are willing to cut their oil production and urge others to do the same. Even though there is no agreement signed, the intention is still there.
Goldman Sachs predicts that the global market of crude oil may soon eliminate the oversupply and face a deficit. This is going to push oil prices higher up to $60/b in late 2017 they say. BP names $55/b.
Despite that, Masterforex-V Academy experts recommend being careful with those forecasts regarding a stable bull market of crude oil. The thing is the the mentioned conflict in Nigeria and forest fires in Canada temporarily cut the oil production by 2 million barrels a day. Should those factors go away and they restore the production, the bulls are not going to get as much of this support and upward pressure they are getting now. On top of that, chances are the prices are going to dive once again since it is hard to find decent fundamentals to back the current bull market, especially given the fact that the oversupply is still there an is not going anywhere in he coming months. The seaports of Singapore and Shanghai are still crowded with oil tankers waiting for their turn to be unloaded and used as temporary storage capacities since there is no free storage left for them. That said, we are unlikely to see any further considerable growth in the coming months.
