My expectations for next month’s West Texas Intermediate (WTI) oil prices have changed slightly. WTI should range from $75 to $95 per barrel. A narrower range is from $76.50 to $86.50 per barrel, which has shifted a dollar per barrel lower than last month’s range. On Friday, July 26, WTI finished the day at near $76.50. This is the fifth month in a row where my expectation for my wider range has been unchanged, and the narrower range has changed slightly to reflect current prices.
There have been no fundamental changes to warrant changing my ranges. Although prices have fallen slightly from last month, prices have not changed significantly.
For those interested in a more bullish outlook, I encourage you to watch Energy Aspect’s podcast with Amrita Sen and Jeff Currie recorded earlier this month when Brent was hovering around $86 per barrel; Brent finished last Friday just below $80 per barrel. Currie suggests that Brent may hit $100 per barrel before the end of summer.
Last month, I discussed that oil and gas equities were lagging. Now, although oil prices have fallen, most oil and gas equities have risen. During the past several weeks, there has been an epic rotation in stocks. The Wall Street Journal published an article “A Stock-Market Rotation of Historic Proportions Is Taking Shape” (subscription required), where it discusses the unusual stock movements.
Few investors saw the shift coming, and many are puzzled by what is behind it: Changing forecasts for Federal Reserve interest-rate cuts? Expectations that Donald Trump will return to the White House? A technology trade that grew precariously crowded?
President Biden’s announcement Sunday that he wouldn’t seek re-election augmented the uncertainty and promised to refocus market attention on the presidential campaign.
Now, investors are scrambling to determine whether the reordering of winners and losers is a mere blip in an era of tech ascendancy—or if a sustainable shift is in fact under way.
This rotation is responsible for oil equities’ odd stock price movement, not Canada’s capital gains tax change. As I stated last month, Canada’s tax change would have zero influence on US oil equities.
When OPEC+ meets in early August, the market may learn new information regarding how OPEC+ intends to navigate the current supply and demand environment.
As seen from the closing WTI price on Friday and my narrower range, I expect that WTI prices are at or near their lower boundary. Of course, no one knows for sure. Commodity prices tend to have minds of their own. It seems to me, however, that WTI oil prices seem to be range bound between the high $70s and mid $80s. My expectations over the past few months have remained relatively constant.