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The labour market in the US remains hot and consumer spending is strong. It is vital for Yellen to decide when it is the right time to raise rates in order to cool down the US economy. As early as March or June? The interest rate decision is just a question of time, like she stated ‘’waiting too long to remove accommodation would be unwise’’. On the other hand, President Trump has announced to outline his tax reform plan in few weeks but the FED and the markets are a little uncertain about the economic policy yet to come.
On Wednesday, the Crude Oil Inventories increased 9.5 million barrels, beating the estimate amount of 3.7 million barrels. It’s the 6th straight surplus and all of them have beaten their estimates. The EIA has estimated that the production in 2017 will be the highest since 1970. The sweep in US drilling may cause concerns for Russia and OPEC, which signed a compliance to lower production recently; with the hope of increasing prices. The OPEC compliance has officially started in January 1, and the analysts have noted that compliance with diminishing the production is at a record 90%.
What is expected from Crude Oil prices in 2017?
• The Dakota Access Pipelines (DAPL) to be completed and the oil is expected to flow this year.
• The price of WTI might be $15 per barrel in average; higher than 2016.
• The Henry spot price for natural gas will be above $3.50/MMBtu in average.
• The total return of the Alerian MLP MLP Index will be at least 20% in 2017.
In conclusion; upward pressure in oil prices is expected, along with the increasing drive for natural gas demand and a much favorable federal approach to fossil fuel development.
