Specious Argument

My expectations for February 2025 West Texas Intermediate (WTI) oil prices are the same as they were for January 2025—that is, $67.50 to $77.50 per barrel. For most of January, prices remained below $77.50. Just after the US announced additional sanctions against Russia, prices spiked temporarily to about $77.50, with some traders believing that prices were headed to $85 per barrel or higher. That did not happen.

Aside from the additional Russian sanctions and the change in the US administration, there have not been a lot of new developments. That is why I am keeping my forecast the same as it was last month.

There are bullish and bearish views about the future price of oil. On the bearish side, Javier Blas from Bloomberg wrote the following in his January 28 article (subscription required) “OPEC+ Will Buckle Under Trump’s Pressure”:

For his part, I don’t think Trump is going for a kill. His negotiating style is simple: Aim high and keep pushing. His administration is full of experienced oil hands who know that sub-$50-a-barrel would hurt the American petroleum industry as much as plus-$100 slows the economy. Thus, Trump is likely to content himself with somewhat lower crude prices of, say, $60 to $70 a barrel. For guidance, remember that the first time Trump posted on social media about the cartel during his first term was in April 2018, when Brent was nearing $75 a barrel.

What’s clear is that Trump sees $80 a barrel — the price level of Brent crude around the time of his inauguration — as too high. Rightly or wrongly, he believes that the price of oil is a benchmark of economic competence, where up is bad, down is good. In his second term as president, lower crude prices will play a key role in offsetting any impact of higher tariffs on inflation. Reduced oil prices are, in Trump’s world, also crucial for foreign policy, including reaching a deal to end the war in Ukraine.

My own belief is that OPEC+ will not necessarily roll over and comply with the administration’s desire for lower prices in the range of $60 to $70 a barrel for Brent. As a reminder, Brent typically trades for about $2 to $4 higher than WTI. So I find Blas’s outlook a tad bearish.

On the bullish side, Eric Nuttall just released a new YouTube video “Energy Market Shock: AI, Natural Gas, and Canadian Oil Tariff Fears | Ninepoint Energy Market Update” where he expresses his bullish outlook. As I have indicated before in prior posts, I am not as bullish as Nuttall.

As I compose this post in the evening on Thursday, January 30, WTI is trading for about $73.30 a barrel. President Trump has indicated that tariffs will be imposed against Mexico and Canda on February 1, and he has stated he will probably decide this evening whether to impose tariffs on their oil sectors.

US President Donald Trump says he will go ahead imposing a 25% tariff on Canada and Mexico from Feb 1.

Trump added he’s still mulling whether the tariffs will hit oil too. “We may or may not, we’re going to make that determination probably tonight” based on oil prices.#OOTT

— Javier Blas (@JavierBlas) January 30, 2025

Depending on what President Trump does and how the markets react, there may be some near-term volatility. I expect, however, that prices will remain within my expected range of $67.50 to $77.50 per barrel.

My expectations for January 2025 West Texas Intermediate (WTI) oil prices are nearly the same as they were for December 2024. I have raised my expectations slightly by $2.50 per barrel to $67.50 to $77.50. Although I expect WTI to remain below $75 for most of the month, I have raised my upper limit slightly because WTI has been acting strong these past few days and is currently about $71.85 as I write this article.

As expected, WTI prices were in the high $60s or low $70s for the month of December. There have been no significant changes. Consequently, I have not changed my outlook very much.

Going into 2025, I am cautious. The first quarter of any year is typically more challenging after the high winter demand period that is followed by the refinery maintenance season. The new US administration may also bring about changes that affect oil prices.

Eric Nuttall and Amrita Sen, in a forty-minute YouTube video, discussed OPEC, oil demand, and Canada’s role. Both Nuttall and Sen tend to be more bullish than the people I follow closely. That said, it is always helpful to keep an open mind and consider the viewpoints of others, both bulls and bears.

I want to wish everyone a Happy, Healthy, and Prosperous New Year!

My expectation for December’s West Texas Intermediate (WTI) oil prices remains unchanged from last month where the range was between $65 and $75 per barrel.

Although the US election is now behind us, I believe that, in the near term, the election results will not significantly affect US oil production and, therefore, oil prices.

OPEC+ has delayed its meeting from December 1 to December 5. Most analysts believe that oil production cutbacks will be extended. By the end of the upcoming week, we will know OPEC+ plans for the next quarter or two.

There seems to be a cautious outlook for December and 2025. One of the more bullish investors is Eric Nuttall. Nuttall provides his outlook for WTI to generally range between $70 and $80 per barrel in the Financial Post article “Hoping Trump revives Keystone XL? Don’t hold your breath, Nuttall says.” The article has a five-minute video that is worth watching.

Nuttall is slightly more sanguine than I am because my expectation is more of the same—that is, WTI oil prices should range between $65 and $75 per barrel.

For those interested in a more comprehensive interview with Nuttall, I encourage you to view his half-hour interview with Investing News on YouTube “Eric Nuttall: Oil Facing Volatile 2025 — Where I’m Investing, Plus Prices, Supply and Demand.”

I do not expect any significant developments in the next month or two. Beyond that, I am concerned about the global geopolitical environment and current stock market valuation.

Charlie Bilello posted a chart on X showing that the US stock market appear rich. When the markets become stressed, correlations tend to converge to one. That implies that oil markets may become turbulent as well.

Like all years, 2025 should be interesting and challenging for oil traders and oil company equity investors.

I wish everyone a Wonderful Holiday Season and a Happy, Safe, and Healthy New Year.

My expectation for November’s West Texas Intermediate (WTI) oil prices is that WTI should range between $65 and $75 per barrel.

WTI has been hovering around these prices recently. With the upcoming election only a few days away and the upcoming OPEC meeting in early December, oil prices are likely to remain in this narrow range until more is known.

The US election should not alter the price of oil in the short term. Traders prefer to have more certainty, however, before learning strongly in one direction or other.

The more important event is the OPEC meeting. The big question is what OPEC will do. Does it return barrels to the market, or does it hold off?

According to Rystad Energy, OPEC is likely to hold off, according to a Bloomberg article “OPEC+ Won’t Bring Back Oil Production This Year, Rystad Says.”

OPEC and its allies aren’t likely to bring oil output back this year because producers are “making huge money” from refined products, according to Rystad Energy.

“Our view is that they will continue to cut the barrels and keep the present market short,” Mukesh Sahdev, Rystad’s head of oil trading and downstream analysis, said at a conference in Houston. The producer group led by Saudi Arabia and Russia would like to keep global oil prices in the $75-$80 a barrel range, he added.

Global oil prices refer to Brent oil prices, which are typically $3-$4 higher than WTI prices.

From my reading of other sources, this price range seems reasonable.

After the December OPEC meeting, analysts and traders will review and revise their outlooks accordingly.