Considerable debate continues to surround oil and the related exchange traded products, such as the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures.
However, some energy market observers are clear in their assessments and they see oil trading higher in the coming months. Some professional traders do not see the current oil bear market lasting very long. Still, some concerned oil market participants believe oil is rallying without strong fundamental cause. A case can be made that oil’s rally is defying still troubling supply dynamics and tepid demand.
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Elevated levels of production remain an issue for oil as well. OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers.
“Despite bearish outlooks like from Goldman Sachs, which predicted this week that oil will be trapped in the $45 to $50 range, Orips Research chief market technician Zev Spiro sees oil surging again. This time, it could rally about 50 percent above current levels,” reports CNBC.
[related_stories]However, many traders remain bearish over the short-term, betting on weakening seasonal trends. Money managers increased wagers on declines in oil prices to a record on increasing U.S. inventories and ahead of a seasonal refinery maintenance that will curb crude demand – futures have dipped in each of the past five Septembers, reports Mark Shenk for Bloomberg.