Crude Oil Prices: Important Triggers for a Recovery
Crude oil prices
February WTI (West Texas Intermediate) crude oil (PXI) (USL) (IEZ) (ERY) (IYE) futures contracts rose 2.8% and settled at $52.25 per barrel on January 11, 2017. Brent crude oil futures also rose 2.7% and closed at $55.1 per barrel on January 11, 2017. Crude oil prices recovered from one-month lows due to the following factors:
- There was record US refinery crude oil demand for the previous week. For more details, read Part 4 of this series.
- Cushing crude oil inventories fell by 0.6 million barrels in the previous week.
- There was renewed optimism that major oil producers like Saudi Arabia and Russia will comply with the production cut deal.
- The US dollar fell 0.3% to 101.75 on January 11, 2017. It hit a 14-year high on January 3, 2017.
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Major oil producers’ production cut plans
OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers agreed to cut crude oil production by 1.8 MMbpd (million barrels per day) starting in January 2017. As a result, crude oil (BNO) (USO) (UCO) (RYE) (PXI) (XOP) (USL) (ERX) rose ~23% since November 2016.
Russia’s energy ministry reported that Russia’s crude oil production fell to 11.03 MMbpd in the first eight days of January 2017—compared to 11.11 MMbpd for the same period in December 2016. Slowing production supports oil prices.
US crude oil inventories
The EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report on January 11, 2017. We’ll look at US crude oil inventories and their regional breakdown in Part 2 of this series.
In this series, we’ll look at US crude oil production, refinery demand, imports, and inventories. We’ll also look at gasoline and distillate inventories.
We’ll start by looking at US crude oil prices in early morning trade on January 12, 2017.