The year 2017 was a strong one in financial markets, as assets across categories made handsome gains. The standout performer, though, was an asset that’s been treated with some skepticism among the investing community.
Bitcoin added 1,328 percent in 2017, and there were other cryptocurrencies that made eye-popping runs in 2017: Ripple, NEM, Ardor and Stellar, which clocked in gains of 36,018 percent, 29,842 percent, 16,809 percent and 14,441 percent, respectively, for the year.
Given the gargantuan gains, very few investment options held a candle to cryptos during the year.
Crude oil was a silent performer, and oil gains flew under the radar during the year when the overall market was on an unhindered bull run.
The Oil Run
WTI grade crude oil ended 2017 atop the $60-a-barrel mark, advancing 12.5 percent to $60.42 a barrel, the first close above the psychological $60 mark in 2-1/2 years. From over $54-a-barrel in the first-half of the year, oil retreated to a low of $42.53 on a closing basis on June 21. The commodity made a strong gain of 42 percent from this low.
The gains are commendable, considering the fact that they came on top of a 45-percent run in 2016.
After bottoming at around $40-a-barrel in the 2007-08 recession, oil staged a steady recovery until the middle of 2014. Thanks to a late-year slide, oil fell about 46 percent in 2014 before ending the year at $53.27. The bear run continued into 2015, as the commodity dropped an incremental 31 percent that year.
Much of the gains in oil prices for the year were attributed to fundamentals. With OPEC cutting supplies; some non-OPEC members doing the same; and inventories steadily on the wane, prices moved to the upside. This was despite U.S. shale production continuing to follow an upward trajectory.
What Does 2018 Hold For Oil?
With OPEC members committing to enact production cuts through 2018, and the demand picture remaining healthy given fairly strong global economic momentum, oil is unlikely to face an imminent retreat.
Last month, Goldman raised its 2018 oil price forecast from $55/barrel to $57.50/barrel, banking on OPEC-led production cuts, according to CNBC.
“Of course, risks remain and we see these as skewed to the upside into 2018 on the risk of an over tightening, either because of new disruptions, demand exceeding our optimistic forecast of OPEC letting the stock draw run hot,” the bank said.
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