Crude oil prices have been incredibly volatile since the summer of 2014, and predictions of where it's going in 2016 range from $20 to $100 per barrel. What should you be expecting? Here are a few things to keep in mind. 

Matt DiLallo: About the only thing that's certain about the crude oil price this year is that it will be very volatile. There are a number of factors that could push oil downward, with one very big catalyst on the horizon that could eventually cause oil to gush higher.

At the moment, bears have near-total control over the oil price because U.S. crude stockpiles continue to grow and are 100 million barrels above their five-year average. Worse yet, some oil storage hubs are running out of capacity, with the key Cushing, Okla., hub having used 63.9 million of its 73 million barrels of working capacity. That storage shortage could continue to grow, especially with upwards of 500,000 barrels a day of new crude supplies coming from Iran this year. Making matters worse, a rapid rise in the dollar could put even more weight on crude prices, with a 5% currency gain leading to a 10% to 25% decline in crude prices, according to analysts at Morgan Stanley. These weights could continue to push crude oil down until it forces producers to start shutting off oil wells while the market works off its storage glut.   

However, more than a year of underinvestment in new oil projects is starting to bear fruit. U.S. oil production is projected to decrease from an average of 9.4 million barrels a day last year to 8.7 million barrels a day this year, according to the U.S. Energy Information Administration. This is due to big spending cuts from companies like Continental Resources (CLR), which is cutting its 2016 capex budget by 66% over last year, with spending now 80% below what it spent in 2014. That reduction will cause Continental Resources' production to decline from an average of 221,700 BOE/d in 2015 to an average of 200,000 BOE/d in 2016. Further, Continental Resources is expected to exit 2016 with average production of 180,000 BOE/d to 190,000 BOE/d. This decline, when coupled with what other producers in the U.S. and around the globe expect, could quickly work off the excess supply, especially if demand grows as expected. It's a scenario that Continental Resources CEO Harold Hamm suggests could cause crude to rally above $60 a barrel by the end of the year.

Clearly, we can expect crude oil to be quite volatile in 2016, with the potential for it to plunge back into the $20s should storage space become an issue. That said, once the U.S. oil decline rate starts working, crude oil could rebound sharply by year-end, with a rally up to $60 a barrel a possibility. 

Image source: LINN Energy.

Travis Hoium: Let's start with what we think we know about oil in 2016. According to the U.S. Energy Information Administration, global oil consumption will rise 1.4 million barrels per day in 2015 and the same amount in 2016. So, demand is going up.
The EIA also predicts U.S. supply will fall 700,000 barrels per day to 8.7 million barrels per day in 2016. That figure could fall even further now that oil is below $40 per barrel. 
Rising consumption and falling U.S. supply will help bring the oil market, which was oversupplied by 1.8 million barrels per day in Q3 2015, back into balance. That means prices should rise sometime in the next 12-24 months -- that's the theory. 
The cloud over the market is coming from OPEC and Iran's expected export growth. OPEC has been pretty consistent with its supply strategy in 2015, but Iran could throw the entire market out of whack. Leaders there think they can bring an additional 500,000 barrels per day to the market within 6-12 months, and Iran has plans to increase production to near the 3.6 million barrels per day it produced in 2011. If Iran comes back to the market full force, and OPEC doesn't offset its increased exports, we could see the country single-handedly offset progress made in bringing supply back in line with demand. That could lead to ultra-low oil prices throughout the year. 
The bottom line is that all eyes will be on OPEC, and particularly Iran, in 2016. What they do will impact oil prices more than any other factor in 2016, and that could mean oil is still $30 per barrel by the end of the year or it could mean $100 per barrel oil again. Nothing in that range would surprise me in 2016. 

Rich Smith: Predictions are one thing, facts are another -- so here are the facts.

Oil storage in the U.S. today is just about maxed out. Indeed, in the week ending January 1, oil storage levels in Cushing, Okla., hit their all-time highs.  As in, ever.

According to Goldman Sachs (GS 0.66%) -- remember them? They're the ones who predicted $100-a-barrel oil back in the day, and were right -- "there's about 3 million barrels of spare storage capacity" in Cushing right now, "which is nothing in the grand scheme of things." Granted, it's cold outside, and having a bit of extra oil on hand to tide us through the winter months isn't necessarily a bad thing. But what about the rest of the year?

My prediction is that there won't be a lot of room to put the oil, and that this will turn oil owners into "motivated sellers." Sellers who would rather sell oil for a bit less than pay a lot more to build new storage tanks, or rent space aboard floating oil tankers to store their oil in hopes that temperatures plummet -- and prices improve -- next winter.

Goldman Sachs thinks all of this implies oil trading in a narrow band, running from $20 to perhaps as high as $40 a barrel this year. Judging from the facts on oil capacity, I have no reason to think they're wrong.

Anything can happen
Inventory is certainly worth keeping an eye on in 2016, and it may drive the short-term price of oil. But don't forget that falling supply and increasing demand will eventually drive prices higher. When or by how much is anyone's guess. 

Maybe the only thing that's certain at all in 2016 is more volatility for oil.