One Reason For Oil Bears To Be Happy And One Reason To Be Concerned

Oil prices were trading lower by more than 1 percent Wednesday morning, which may call into question the recent 10-percent rally that began on June 21.

Russia: No More Cuts

One of the reasons that could be attributing to oil's decline on Wednesday comes from Russia, Bloomberg reported. The non-OPEC member previously agreed to abide by OPEC's supply cut; however, it isn't open to any incremental supply cuts on top of the 1.8 million barrels already agreed upon.

Any additional supply cuts would signal to the global market that Russia and OPEC are nervous, as the actions already taken aren't doing enough to support oil prices.

Fake News In The Oil Market

Oil bears are quick to point out that American shale drilling represents a growing disruption to the energy market. However, this is merely "fake news," said J. Marshall Adkins, Raymond James director of energy research, as quoted by Bloomberg.

Many headlines touting the strength of American shale drilling have been "misleading, or outright wrong" and have distracted investors, the analyst said in a research report. In fact, the oil market is "fundamentally a bullish overall picture."

Some of the incorrect headlines highlighted by the analyst include lower gasoline demand, a surge of oil production in Libya and Nigeria and expectations for supply growth exceeded demand growth in 2018, among many others.

Given the plethora of "fake news" in the oil market, the analysts believe oil will hit $80 per barrel in 2017.

"While increasingly lonely in our bullish oil price view, we are still convinced that oil prices are on track to set cyclical highs over the next six to 12 months, and we encourage our readers to stay focused on the real fundamentals and not get caught up in the day-to-day torrent of noise," the analysts also stated.

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