My expectation for the West Texas Intermediate oil price for August is the same as it was for July, namely WTI will range between $65 and $75 per barrel. While it might deviate from that range for a few days, I expect that WTI prices will fall within that range for most of the month.
The US Energy Information Administration predicts lower prices in the months ahead. In its latest "Short-Term Energy Outlook" (.pdf), it states the following:
Brent crude oil spot prices averaged $74 per barrel (b) in June, a decrease of almost $3/b from the May average. EIA forecasts Brent spot prices will average $73/b in the second half of 2018 and will average $69/b in 2019. EIA expects West Texas Intermediate (WTI) crude oil prices will average $6/b lower than Brent prices in the second half of 2018 and $7/b lower in 2019. NYMEX WTI futures and options contract values for October 2018 delivery that traded during the five-day period ending July 5, 2018, suggest a range of $56/b to $87/b encompasses the market expectation for October WTI prices at the 95% confidence level.
Yet others believe that prices are on the cusp of a bull market. On July 28, the Wall Street Journal, in an article titled "As Oil Industry Recovers From a Glut, a Supply Crunch Might Be Looming" (subscription required), stated the following:
"The years of underinvestment are setting the scene for a supply crunch," said Virendra Chauhan, an oil industry analyst at consultancy Energy Aspects. He believes a production deficit could come as soon as the end of next year, potentially pushing oil above $100 a barrel.
Veteran oil investor Pierre Andurand is betting on a multiyear bull run in oil. Mr. Andurand said Brent could hit highs of $100 a barrel this year and top $150 by the early 2020s. Others forecast more modest price gains but still believe a supply deficit will raise prices.
Oil price uncertainty continues to rage on. I am waiting to see how trade tensions play out over the fall, how Venezuela manages in the months ahead, and how oil markets react to Iran sanctions in November. I expect substantial oil price uncertainty will remain for the next several months.