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Oil prices could hit USD100 by summer

WTI crude daily technical analysis
Fig. 1. WTI crude daily.
Fig. 1. WTI crude daily.
The WTI crude is still in an uptrend as shown in Fig. 1. The 100-day MA and USD70 levels are providing resistance and support. It is consolidating sideways in the short term between USD72 and USD82.50.
WTI crude weekly technical analysis
Fig. 2. WTI crude weekly.
Fig. 2. WTI crude weekly.
We are stuck between the 50-week MA, which sits just below the USD89 level, and the 200-week MA which sits right around the USD70 level. This market has no momentum right now, and there is no clear direction in the longer-term.
If we can break above the USD82.50 level, then it's likely that this market will go higher, maybe reaching the USD90 level. However, if we turn around and breakdown below the USD72 level, the USD70 level will be targeted initially, and anything below there could get ugly.
Fundamentals
In the months ahead, many oil market experts are expecting crude oil prices to rise again. That includes Scott Sheffield, CEO of Pioneer Natural Resources. He firmly believes oil will approach the triple digits again this summer.
Scott Sheffield gave his outlook for oil prices on his company's Q4 conference call, stating: "We remain highly constructive on oil prices. I'm still very optimistic that we'll move back into that USD90 to USD100 range sometime earlier this summer."
Sheffield previously pointed out his belief that Saudi Arabia likely doesn't want to see oil dip below USD75. That will likely lead OPEC to cut its output if oil prices fall further.
Russia also recently said it would cut its production by 500,000 bpd starting in Mar due to the impact of sanctions on its economy. On top of all that, U.S. producers, including Pioneer, are keeping curbing capital spending, which will limit new supply.
In addition, there are several demand drivers this year. While there are concerns that rising interest rates could slow the global economy and impact demand, the U.S. economy has proven to be highly resilient.
Unemployment remains low, which means consumers should continue spending money. That should drive gasoline demand, especially as we head into the summer driving season. On top of that, demand from China will rebound strong following its reopening from 3 years of pandemic-driven lockdowns.
These catalysts lead the International Energy Agency (IEA) to forecast that global oil demand will grow by 2 m bpd this year to a record 101.9 m bpd. The IEA sees demand exceeding supplies by the second half of the year. That should drive oil prices higher.
Higher oil prices would enable producers to generate even more free cash flow, nearly all of which will be returned to shareholders through dividends and share repurchases. The potential for high cash flow and returns could boost oil stock prices, making the sector look like an attractive investment opportunity.
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