Is $71 As Good As It Gets For Oil Bulls This Year?

After shrinking consistently for months, global oil stocks began rising again at the start of this year. The IEA, OPEC and the U.S. Energy Information Administration, the third major forecasting body, have all underestimated the growth in production outside of OPEC and specifically, in the United States. For the first time since the effects of OPEC’s production cut kicked in around mid-2017, the three agencies are predicting the global oil market will face a surplus in 2018. According by analysts, the benchmark Brent crude futures contract LCOc1 hit a near-three-year high of $71 a barrel in late January and might now struggle to move much above its current levels around $65. 

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For Brent, probably. For WTI I think $71 would be a dream (that's not going to come true). Also, tariffs start next week ... that's going to make things for the industry more expensive as far as I understand. 

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14 minutes ago, TraderTate said:

For Brent, probably. For WTI I think $71 would be a dream (that's not going to come true). Also, tariffs start next week ... that's going to make things for the industry more expensive as far as I understand. 

Higher costs would have to be passed down to the markets, are we looking at higher prices starting next week with tariffs into the equation? What's your take on this?

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1 minute ago, Mauricio Machado said:

Higher costs would have to be passed down to the markets, are we looking at higher prices starting next week with tariffs into the equation? What's your take on this?

Well theoretically, yes, increased costs would be passed down to spot prices--the companies aren't going to eat these costs. But I would expect this would take some time, perhaps even a long time.

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Just now, Rodent said:

Well theoretically, yes, increased costs would be passed down to spot prices--the companies aren't going to eat these costs. But I would expect this would take some time, perhaps even a long time.

So continuing with this theory. Futures, as speculative as they are, would have to start climbing, along with volatility, since we don't really know what the effect of this tariffs are going to be to the bottom line of these corporations. Maybe? Maybe not? Who cares?

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2 minutes ago, Mauricio Machado said:

So continuing with this theory. Futures, as speculative as they are, would have to start climbing, along with volatility, since we don't really know what the effect of this tariffs are going to be to the bottom line of these corporations. Maybe? Maybe not? Who cares?

Well, in my very un-expert opinion regarding futures, I would think yes. Maybe @TraderTate or someone else who understands futures a bit better could better speak to that.

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$40 would be better. Maybe not for the people who think $71 is best, but for the rest of us, it would be better:)

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