WTI Crude Oil: 2017 Forecast - 28 December 2016

Wednesday, 28 December 2016 7:00

By: DailyForex.com

At the moment, the WTI Crude Oil and Brent Crude Oil markets are the ones that I get the most questions about. This is because of the recent breakout and of course the production cut agreement between the OPEC and non-OPEC countries. While this cuts back on supply, there are some things that still remain in this market that could work against the value of the commodity. It is because of this that I think we will initially be bullish during the year but it’s only a matter of time before the sellers return.

If you look at the monthly chart, the $60 level is just above the 38.2% Fibonacci retracement level. This is an area that is a large, round, psychologically significant number and has been resistance in the past. It is because of this that I think a lot of sellers will return. However, I don’t think we will go above there. At least not anytime soon, mainly because of all of the headwinds that the crude oil markets will be facing.

Still a lot of major headwinds

There are still a lot of major headwinds when it comes to the pricing of crude oil right now, and the biggest one is a simple lack of demand. While demand could pick up in the United States, it takes a while for demand to pick up another parts of the world if the United States is in fact going to be truly does out of global exhaustion. Beyond that, another big problem that these countries will face when it comes to pricing is the fact that as the price of crude oil goes higher, suddenly Canadian and American Shale oil producers can make a lot of money by drilling in those fields it currently sit empty. Ultimately, this is a market that has a bit of a permanent ceiling in it. I think we reach towards the $60 level, and then start falling again.

Crude oil

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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