WTI Crude Oil trying to find equilibrium around $60

Updated: Sep 6, 2019


Soaring of Oil prices (US exchange traded WTI Crude Oil as well as UK exchange traded Brent Oil) in 2018 has been a topic of much worry globally. We look at the US traded WTI Crude Oil price as a reference in this article, but the same analysis applies to Brent Oil price variations too. WTI Crude Oil has trended higher from the all time lows of below $40 per barrel in 2016-2017 to recent highs of $70+ per barrel in 2018, almost near 100% hike!

There are various factors governing this commodity price moves, the key factor being production of Oil by OPEC and non-OPEC nations, while trying to maintain the control over global Oil price. Inter-national politics amongst OPEC members and non-OPEC member nations primarily Russia and the US are (not to mention) subtle elements while maintaining the controlling stake.

Here is an overview of distribution of Global Oil reserves between OPEC and non-OPEC member nations and the massive investments that have been made to increase​​​​ Oil reserves in natural reserve rich countries.

And here's a chart showing how the US has faired in producing its own Crude Oil over last few decades. Spike in Oil barrels produced within the US was seen in 2015 in an effort to leave the dependence on OPEC nations and other non-OPEC members who drove Oil prices.

All this cumulative global Oil Supply ups and downs over the years has impacted the Oil prices. A closer look at the past 10 years Oil price chart nicely depicts the period of high supply oil resulting in low WTI Oil Price (same from Brent) during the early 2017 and even before mid 2016. Oil pacts between OPEC and non-OPEC nations to curb Oil production glut led to Oil price hike. Now in 2018, while the US supply is reducing from all time highs, OPEC nations are planning towards further increasing Oil supply (increased Oil reserves as described earlier) in an attempt to bring Oil prices down. What a play of Supply and Demand in this massive globally used commodity !! Is WTI Crude Oil seeking equilibrium at around $60 in the rest of 2018 and 2019? Probably yes.

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