FUNDAMENTAL FORECAST FOR USOIL: BULLISH
Talking Points:
As crude oil booked another weekly gain on renewed Iran sanctions that helped breed supply shock concerns. Crude oil traded to the highest levels since November 2014 on both WTI & the global benchmark, Brent at $71.89 and $78/bbl respectively.
Higher for Longer? The Likely Reality for Crude
Early last month, I quoted the chief economist of the IEA who said crude bulls should be careful what they wish for because they just might get it. It is higher prices and looking down the swap curve through 2022 after Trump's withdrawal from the Iran Accord has a message, get ready for higher prices for longer.
Looking to Brent crude swaps curve (prices over time), all future swaps were above $60/bbl for the first time since November 2015. With longer dated swaps lower than front-dated swaps over the last few years, the rising 2022 swap above $60 shows that risk is on for crude oil bulls and the US' oversupply is losing argumentative ground to undersupply from OPEC.
