4 Jan

Crude Oil Could Continue to Rise in 2018

WRITTEN BY Sarah Sands FEATURED IN Macroeconomic Analysis

Crude oil movement in 2017

Crude oil prices improved in 2017. The WTI (West Texas Intermediate) crude oil active futures contracts remained within the range of $54–$44 in 1H17. However, it rose 31.2% in 2H17 and 14.2% in 2017.

Crude Oil Could Continue to Rise in 2018

Crude oil’s (USO) (UCO) movement is mainly supported by various fundamental factors. The fall in US crude oil inventories in various months and the continuation of production cut decisions from OPEC (Organization of Petroleum Exporting Countries) and Russia mainly drove crude oil prices in 2017. Previously, we discussed that despite the rise in crude oil prices, the US energy sector had a poor performance in 2017.

Improvement in demand     

Improved economic growth in major emerging economies (EEM) like India (INDA) and China (FXI) (YINN) and in major developed economies like the United Kingdom (EWU), the US (SPY), and Europe (VGK) is mainly driving investors’ sentiment. The improved economic growth is also improving the demand for crude oil in the economy. Higher demand is mainly boosting oil prices.

2018 outlook

Crude oil might continue its upward direction in 2018. The continuation of fundamental factors is necessary for this movement. If OPEC and Russia continue the production cut decision, then we might see higher crude oil prices.

In the next part of this series, we’ll analyze how the industrial sector performed in 2017.

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