Crude prices - going up or down?

Crude Prices

Are crude prices going up or down in 2018?

Well, a year is a long time, and pundits line up on both sides.  If peace breaks out in the MidEast, VZ gets its act together, and/or OPEC pulls out the stops, then prices could clearly drop.

If things get dicey in the MidEast, if VZ tanks further, or if pipelines break (like Forties did last month), then prices could clearly rise.

But most likely some or all of those will happen during the year, and there will be various bumps up and down.  If we low-pass filter such events and just look at fundamentals, then I'd say that prices are going up slowly, unless and until there is a significant economic contraction somewhere in the world...when it happens, it'll probably be in the US.

Here's why we're heading up:  Oil in storage in the US is going from setting massive new highs to a slow but continuing draw-down.  Even with growing production the consumption and export of oil products exceeds production and imports.

For the world overall, supply and demand have been fairly closely balanced, too.  This could change, but currently all major economies are doing OK, and it's projected to stay this way all year.

Not only is storage in the US dropping, but floating storage overseas has been drawn down as well.  The glut just isn't as bad as it has been for the past couple of years.

So, as long as economies stay strong, prices are likely to tend upwards.  If supply gets too tight, this will be a self-correcting problem as we're at the end of the expansion phase and high energy prices could prick the bubbles like they did in 2008.  Hopefully US and OPEC production will keep prices moderated, at a level where US producers remain profitable but cost-focused and the WTI discount to Brent remains wide enough to keep US refineries working hard.

Yes, I realize this is a personally self-serving perspective on energy prices, and others may have differing perspectives.  Wind and Solar people should want oil at $80/bbl and gas at $6/MMBtu so they are somewhat competitive without subsidies.  Consumers should want prices to get back down to last year's levels.  No price will please everybody, so I'm going to go with what pleases me!