Oil Prices: No Happy New Year in 2018?
Oil companies and their investors were downright giddy heading into 2017. Crude prices were finally back over $50 a barrel, which would give most producers the cash needed to return to growth mode. While that optimism faded when oil prices dipped into the low $40s earlier this year, they've come roaring back. The U.S. oil price benchmark, West Texas intermediate (WTI), was recently over $57 per barrel, while the global benchmark, Brent, was above $63. That put WTI up about 8% for the year, with Brent rising nearly 20%. With most oil companies having reset themselves to run on $50 oil, those price points suggest 2018 could be an outstanding year for producer profitability.
However, the International Energy Agency (IEA), an organization founded to help member countries respond to oil supply disruptions, recently warned that the industry shouldn't get too comfortable with where oil is at the moment. Even though OPEC recently extended its production reduction agreement, the IEA predicts that oil supplies would once again outpace demand early next year. If that forecast comes to fruition, it could weigh on oil prices. Yet the report anticipates the status quo, which is never how things in the oil market shake out.
Image source: Getty Images.
Source: Fool.com
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