What if I told you there was a crystal ball that predicted where crude was heading in the next 3-6 months? You would call my bluff and witness several different opinions on what this market is going to do. While crude currently sits at $45.20/bbl, Barchart.com predicts crude reaching $52-55/bbl by Halloween, and $62-65/bbl by the middle of Q1 of 2016. Here are their short-term views on the bullish outlook:
Baker Hughes announcing a long string of dropping rig counts as producers are cutting supplies.
U.S. oil production has fallen 9.1 mpbd which is 25% off recent highs. Industry forecasts are for production to fall even further to approximately 8.6 mbpd by mid-2016.
The Wall Street Journal stated that they see an increasing number of analysts and traders that have different expectations, compared to the above remarks. Back on August 19th, crude fell to a six year low below $41/bbl. As stated above, crude has rallied to approximately $45/bbl as we approach October. The analysts and traders think crude can dip into the $30 range with the global oversupply of crude and concerns about the Chinese economy moving forward.
The chart above shows a four week moving average of the U.S. refinery demand in millions of barrels a day. As you can see, right around fall maintenance for refineries, there is a drop in demand. This should hurt crude prices, and add to the global oversupply of crude across the board.