Fundamental Forecast for Crude Oil Prices: Bullish

Crude remains bid as the Organization of the Petroleum Exporting Countries (OPEC) and its allies extend the production cuts from 2017, and oil prices may continue to exhibit a bullish behavior as the group stays on course to reduce supply.

Unlike, OPEC and its allies, the u.s. Energy Information Administration (EIA) forecasts oil prices to average $55/bbl in 2018 as ‘crude oil production from the United States is expected to increase more than in any other country.' However, narrowing U.S. inventories paired with the recent slowdown in field production may keep oil prices afloat especially as the bullish momentum appears to be gathering pace.

USOIL Daily Chart

Near-term outlook for USOIL remains constructive as crude prices clear the May 2015-high ($62.56), while the Relative Strength Index (RSI) extends the bullish formation from the previous month and pushes deeper into overbought territory. A break/close above $64.80 (100% expansion) opens up the next region of interest around $65.70 (100% expansion), with the next key hurdle coming in around $69.20 (50% retracement).