A week after the OPEC agreement, oil prices continue to bounce around.
We are likely to see a lot of volatility in 2019. Even if the agreement did put a floor on oil prices, there are many other factors in operation that could end up pushing prices higher or lower. In fact, expect both to happen at times throughout the year.
There are a number of bullish cases that can push oil prices higher. The situation with Iran, for example, could produce a run. At the same time, low capital spending since 2014 will eventually catch up with supple.
On the bearish side, the fact that it appears the global economy is slowing could put massive pressure on the price of oil. OPEC could also ignore their own agreement and keep pumping.
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I didn't think it would drop below $46 after the OPEC decision. They didn't cut enough and the USA is producing tons of oil and the U.S. Energy Information Administration today said that the oil production from seven major U.S. shale basis was expected to surpass 8 million barrels per day for the first time by the end of the year.
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