They say international crude oil market is controlled by smart investment by the smart HNIs. That’s why keeping a tab on investment tre ndof the smart money can help understand the movement trend of crude oil prices internationally. Though there has been significant dip in the petroleum prices when compared to that of last year, there has been a relative calm in the market in the last one month. This relative calm came after significant rise (around 25 per cent) in the crude oil prices during late August 2015. Analysts believe this relative calm in oil market is the outcome of reduced expectation of the market from the US Fed of increasing key rate from near-zero level in 2015 itself. In fact, many have started to wonder whether crude oil as well as energy stock has at all reached the bottom and is now consolidating before a turn around. Global investors, who have been investing in oil and energy stocks, are eagerly waiting for a rebound since many leading market analysts first warned about an oil bust back in June 2014. As there is hardly any change in the fundamental factors of crude oil market, when compared to early 2015, the time has not yet come to forecast any crude oil rebound.
Now, let’s check the rebound case possibility of energy stocks from technical chart. While analyzing the WTI crude oil, we bumped on the fact that there is a steep resistance, starting from US$50 per barrel up to US$52 per barrel. If the crude oil price moves above US$52 per barrel and consolidates over $60, it will be a signal of bullish price movement and a bullish run will start. When checking the chart, we found out that major support level is located at US$40 per barrel. If this support level is breached, it will lead to a bearish run. We also found a strong support level at US$45 per barrel and downward breaching of this level will give the first ever signal of bearish run. The pink sheet of World Bank Commodities Price Data is showing that monthly average of Brent Crude Oil for the month of October 2015 is US$48.1. While checking the WTI and Dubai crude oil prices for the month of October 2015, we found out that the prices are US$46.2 and US$46.6, which are alarmingly close to the first support level (S1) at US$45.
Now, let’s have a look at the commodity forecast data of World Bank, calculated in Oct’15. It shows that the average spot price of crude oil is expected to go down from US$49.7 in 2015 to US$47.7 in 2016. However, after 2016, there will be a trend of gradual recovery. The projected crude prices in 2017, 2018, 2019, and 2020 will be US$49.9, US$52.1, US$54.5, and US$56.9 respectively. It is only after 2020 that the crude oil market will enter into bullish market in real sense and will reach US$70.8 only in 2025.