While many in the oil industry have been talking about lower for longer oil prices the truth is that oil prices will not stay low for much longer. Oil has confirmed that the market may have put in the most significant bottom in oil prices since 1999 after it posted its best quarter since 2004. Long-term charts are suggesting a breakout that puts oil at much higher levels.
Back in early 2016 oil doubled bottomed in the $26 a barrel handle and many had felt that oil could go below $10 a barrel. They worried that shale oil production would keep oil lower for longer and big and little energy companies felt pain and embarked one on the biggest investment pullbacks in energy spending history. Now with oil supply dropping at a historic rate, OPEC doubling down on production cuts and shale and Gulf of Mexico oil output sputtering we should see oil continue to rise into the end of the year. In fact, we should see oil continue to rise for the rest of this decade.
While the bottom in 2016 has not been without its big corrections the fundamentals on oil are getting clear to almost everyone. Global oil demand is surging as low oil prices and an improving economic backdrop has caused the strongest global oil demand growth in at least two years if not longer. The rash of Hurricane, mainly Harvey was the reason for oil recent correction, but the rebuilding process post-Hurricane Harvey will only lead to even stronger oil demand.
U.S. oil exports are also surging. Some think that because U.S. oil exports are rising and that is making the price go even higher. Yet, the fact is that if it were not for U.S. exports surging prices would be higher than they are. The large spread of Brent oil over WTI means there is a tight supply of oil in Europe and Asia that needs to be filled. The U.S. oil production has risen to the occasion.U.S. oil exports increased by 300,000 barrels per day to a total average of 900,000 barrels per day in the first half of 2017 from the same period last year, according to federal data released this month. Other data show the U.S. hit a record of about two million barrels per day in late September, according to the Energy Information Administration, the data analysis arm of the Energy Department as reported by the Washington Examiner.