by Stecyk
on April 27, 2020
Given the extreme oil price volatility these past few months, I am glad that I did not forecast any price ranges. There are way too many fast-moving parts that are poorly understood. I do not know that anyone can provide any guidance at this point with any confidence. That said, I do expect volatility to subside somewhat.
I am not providing any investment advice or guidance. You and your financial adviser are responsible for your own investment decisions and actions. That said, I encourage you to consider oil companies that possess financial and managerial strength to weather the current storm.
With the benefit of hindsight, I expect that the prices of many oil stocks bottomed in March. But I am not ruling out further downside or a new bottom in the coming months. In the short- to medium-term, however, increased testing and better treatment are likely to damp the negative effects of COVID-19 before a final vaccine is available for everyone. And in two, three, or four years, I expect that we will look back at this period and wish we had increased our exposure to the oil sector.
This downturn in the oil industry is the most severe that I have ever seen. Many companies simply will not survive. So again, I want to stress that long-term investors should pay attention to those companies that can withstand an extended period of low oil prices.
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by Stecyk
on March 17, 2020
Although we are at midmonth with a very volatile oil environment, I want to bring to your attention an excellent podcast that I listened to this weekend.
Columbia Center on Global Energy Policy produced a podcast titled “Why This Crash is Different” featuring guests Helima Croft, Amy Myers Jaffe, and Bob McNally. I found this nearly hour-long podcast to be one of the best sources of information. Because the guests are knowledgeable and experienced, they were able to provide a great synopsis of what has taken place and provide their thoughts and opinions on future developments. I encourage you to listen.
Markets are extremely volatile and unpredictable with the unfolding of the COVID-19 crisis and the OPEC+ brouhaha. For those reasons, I will not be providing an oil price forecast at the end of this month and possibly for several more months. There is simply too much uncertainty.
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by Stecyk
on February 27, 2020
I am not providing a forecast for next month.
As we have seen during the past month, the coronavirus, or COVID-19 as it is officially named, is the major factor for determining the reduced oil demand for the next several weeks or months. Many of us have become amateur epidemiologists trying to understand all the data. Although I have read and watched as much as possible on this subject, I believe that most of us are still learning a lot about the virus and what its effects may be. While I have formed some opinions, I do not have much confidence in those opinions and will change them in a heartbeat when new and better information comes along. So, for those reasons, I am declining to provide a forecast for next month.
On March 5 and 6, OPEC+ is planning to meet and agree on new oil production cuts in response to reduced demand from the effects of coronavirus. I hope that this meeting goes better than their earlier meeting in February where they did not agree on any cuts.
One last thought: be careful when reading expert opinions about the coronavirus and its effects. Many of the opinions that I have read are extreme in either direction. The reality is that future is uncertain. Of course, I hope that the coronavirus is mild and that it remains largely contained.
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by Stecyk
on January 31, 2020
My last month’s forecast of $55 to $65 a barrel was violated on both ends. The upper end was pierced during the US-Iran conflict. And, as we are currently experiencing, oil prices have fallen through the lower end because of the coronavirus, 2019-nCoV.
Offsetting the coronavirus is the Libyan situation where oil exports have fallen tremendously. But the coronavirus situation is affecting economic activity, especially in China, and therefore adversely affecting confidence in oil prices. OPEC+ may be moving its early March meeting to sometime in February to address the coronavirus concerns.
My forecast is for West Texas Intermediate to range between $50 and $60 a barrel. Because of these strong crosscurrents, I do not have a strong opinion on oil prices. Assuming OPEC+ meets in February, I anticipate that it will adopt measures to prevent a larger glut of oil and therefore oil prices from falling too far. At the higher end, the coronavirus will keep a lid on prices—baring any exogeneous events—until it is brought under control.
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by Stecyk
on December 30, 2019
For the next month, I have increased my West Texas Intermediate oil price forecast by $2.50 to range between $55 to $65 a barrel.
With phase one of the US-China trade deal now out of the way and OPEC+ announcing a cutback to production, oil prices rose slightly more than I expected, though still within the range I had set out last month. Throughout December, both the stock market and oil prices climbed higher. The question now is have equity and oil prices advanced too far, too fast. While I tend to think that both are ahead of themselves, I also realize that price momentum can go on for longer than most may anticipate. Now, I would like to see how the markets in general react in the New Year, especially after the strong 2019 stock market.
Overall, I expect WTI oil prices to range between $57.50 and $62.50 a barrel, though I have allowed more room on both ends to provide a $10 range.
To investors and traders, I extend my best wishes that this coming year and decade treat you well.
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