WTI $70 by end of Q1'2019I say $70 WTI by end of Q1'2019. Oil and oil stocks are priced as if Iran is producing sans sanction, US shale can grow at sub $50 WTI, OPEC+ will not follow through on the 1.2M cut, Canada will not follow through on the 325k cut and no Sino-US trade deal before March 1st. The first 4 items in the list starting will start reflecting in production and inventory starting in 2019 as that is when OPEC+ and Canada said they will start. The bearish traders are just taking advantage of that fact. The real wild card is the Sino-US trade deal. Here are my thoughts for why oil will be $70 in Q1'2019.
1. Iran production will continue to follow.
2. Oil E&P have already been revising budgets to the downside. Hmmm...how can they grow proudction but cut back spending. All the operational efficiency would of been achieved in 2014/15. I have not read any new ground breaking way to extract shale.
3. OPEC+ will achieve the 1.2M in cuts as Saudi stated in their budget they are pricing in $80 Brent.
4. Alberta will cut 325k as they stated
5. The way Trump tweets about Fed, you know he has his eye on stock markets. He knows a China US trade deal even if its a compromise is good for business. This way I am not too certain about but I say its above 50% chance a deal is done.
Add in the fact that US troops withdrawing from Syria thus adding instability to middle east. Libya's NOC always getting attacked. Political unrest in Nigeria and Venezuela. None of these have been adequately priced into WTI oil price otherwise WTI should be $65-$70 today.
And the biggest wildcard is if Mueller investigation leads to Trump taking a deal and steps down from office. After wards US sanctions KSA for their part in the reporter incident. If this happens WTI will shoot to $150. However this has a 0.000000000000000000000000001% of happening.