Nymex Light Crude plotted against CPI gives an historical perspective on current crude prices: high prior to China’s entry into the global energy market, but low relative to prices since then. Expect strong support at the 2008 low.
Has fracking permanently suppressed oil prices, or will production dwindle over time in response to lower prices? Oil well efficiency is rising as marginal wells are mothballed.
Chart: Rising oil well efficiency in the US – pic.twitter.com/5w54OqyxKJ
— SoberLook.com (@SoberLook) June 15, 2015
Production forecasts are rising.
US shale still refuses to buckle. Not sure OPEC really winning here. From Deutsche Bank's latest pic.twitter.com/Z7wHxv3yrl
— A Evans-Pritchard (@AmbroseEP) June 16, 2015
Causing oil futures to fall. June 2020 Light Crude broke support at $70/barrel, offering a target of $55/barrel.
* Target calculation: 70 – ( 85 – 70 ) = 55
Spot prices (Nymex Light Crude) continue to range between $58 and $61 per barrel. Reversal below $58 would signal retracement to test medium-term support at $54. Breakout above $61 is unlikely at present, but would signal a rally to $68/barrel.