On technical grounds, USOIL has seen yet another V-bottom (the last time being early 2016). If oil price were market-driven, a pull back is very likely to just under $60. A golden cross around that price will take place before the summer, and 2016-2017 will recur.
However, each time oil prices crashed and bounced due to actions taken by OPEC, and Saudi Arabia in particular. Geopolitics and the internal politics of major oil producing and consuming countries play the deciding role.
Recently, Saudi Arabia is standing up to USA for their OPEC cartel. For them, both US protection and oil income are critical. Because it is inconceivable that the NOPEC legislation would pass in the US congress, the threat by Saudi Arabia is imaginary. The status quo will not be challenged in the short- medium-term.
Moreover, Trump is facing reelection. It is definitely in the interests of US industries 1. for oil to continued to be traded in USD, and 2. for oil price to be low --- even though fracking is a thing in the US. Undoubtedly, oil companies will lobby to sustain a level of oil price. However, if gas and heating oil prices go up too much, Trump will have great difficulty with his electorate.
With all these reasons in mind, I think oil price will stabilize at around $50 till US election.
However, each time oil prices crashed and bounced due to actions taken by OPEC, and Saudi Arabia in particular. Geopolitics and the internal politics of major oil producing and consuming countries play the deciding role.
Recently, Saudi Arabia is standing up to USA for their OPEC cartel. For them, both US protection and oil income are critical. Because it is inconceivable that the NOPEC legislation would pass in the US congress, the threat by Saudi Arabia is imaginary. The status quo will not be challenged in the short- medium-term.
Moreover, Trump is facing reelection. It is definitely in the interests of US industries 1. for oil to continued to be traded in USD, and 2. for oil price to be low --- even though fracking is a thing in the US. Undoubtedly, oil companies will lobby to sustain a level of oil price. However, if gas and heating oil prices go up too much, Trump will have great difficulty with his electorate.
With all these reasons in mind, I think oil price will stabilize at around $50 till US election.
