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Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

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Identifying 2018’s Opportunities In Oil

For our last column of 2017, let’s take a look at 2018 – and see what might be in store for oil and oil stocks.

There isn’t an analyst who doesn’t think that OPEC to continue to comply with production cuts for the coming year. That, considering OPEC’s long history of cheating, should be viewed as wildly bullish in itself. In addition, also widely agreed upon is the growth of global oil demand for next year, at a stunning and historically massive 1.5 million barrels/day.

Using those two projections alone would indicate a complete re-balancing in oil stockpiles and an equally massive explosion in the price of oil (and oil stocks) for 2018.

But hold on just a second.

Analysts are quick to insert a few question marks into their projections, making their ultimate predictions for oil far less rosy.

The first is in re-balancing, where several oil watchers (like the Dallas Fed) sneer that OPEC is benchmarking to a 5-year inventory target that has been moving in their favor for the last 4 years of glut overhangs: 

 

(Click to enlarge)

The second and more important wildcard is in U.S. shale production for the coming year, where both the EIA and IEA, as well as several U.S. bank analysts, are expecting another 1 million barrels a day of production to emerge.

 

(Click to enlarge)

On the other side of this projection are Goldman Sachs and ABN-Amro, who now think shale has run…

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