In contrast to the extreme volatility in natural gas, oil has been rather well behaved this year. The global crude oil benchmark, Brent, is essentially unchanged since the start of the year. Not even the Russia-Ukraine conflict—and the potential that the world's second-largest crude producer (Russia) could be hit by sanctions—has shaken oil prices out of their range.
Growing output in the U.S. has largely insulated the market from supply disruptions, at least for now.
Bull Case: If Russia gets hit by sanctions that affect its energy sector, the impact on prices would be immediate and bullish. That could be the catalyst that sends Brent above the upper end of its recent $105-112 range. Meanwhile, if the global economy continues to recover, oil demand could rise more than currently expected.
Bear Case: The glut of crude oil in the U.S. will continue to grow as output in the country hits new highs. Libya's production will also recover as unrest in that country dies down. That could quickly add 1 million barrels per day of supply to the market. Brent would fall below $105 in that case.
Prediction: Brent will remain trapped in its trading range for the rest of the year amid relatively balanced supply-and-demand fundamentals. Take a look at the iShares U.S. Oil & Gas Exploration & Production ETF (IEO | A-74) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP | A-54) for exposure to high-growth U.S. E&P companies that should benefit in a flat oil price environment.