“Crude oil is no longer a crowded trade, so there is greater scope for a new cycle of buying to emerge,” says Tim Evans, an energy analyst at Citigroup (C). “The money is now on the sidelines and not in the market.”
For traders, oil at $80 a barrel (the current price of WTI) has significantly less downside risk than oil at $100. Barring some fundamental shock to the market that kills demand, there seems to be a natural equilibrium around $80 in the U.S. It’s high enough for producers to keep drilling and pumping, yet low enough that it shouldn’t curb consumer demand. At $3.43 a gallon, the average national price of gasoline in the U.S. is back to where it was in January.
FDM Price at posting:
$1.13 Sentiment: Buy Disclosure: Held
