Will US Crude Oil Prices Test New Highs?
Crude oil prices and US stock exchanges
US crude oil (BNO) (PXI) (FENY) prices are near an 18-month high as of February 13, 2017. Meanwhile, the S&P 500 (SPY) (SPX-INDEX), Dow Jones (DJIA-INDEX), and NASDAQ (COMP-INDEX) are near all-time highs. Bullish momentum in the US stock market could support oil demand and oil prices. For more on crude oil prices, read Part 1 and Part 2 of this series.
Crude oil’s highs in the last 12 months
NYMEX crude oil prices settled at $54.1 per barrel on December 28, 2016—the highest since July 14, 2015. As of February 13, 2017, crude oil prices are 2.2% below their highs.
Key bullish drivers for crude oil in 2017
- speculation of an extension of major oil producers’ production cut deal
- China’s crude oil imports and demand
- India’s crude oil imports and demand
- US gasoline demand
- fall in Russia’s crude oil production—read Part 1 of this series to learn more
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Crude oil’s lows in the last 12 months
US crude oil settled at $26.21 per barrel on February 11, 2016. Crude oil prices hit 13-year lows due to:
- record US crude oil production in 2015
- record OPEC crude oil production
- record Russian oil production
- high global crude oil and refined products inventories
As of February 13, 2017, crude oil prices have risen 102% from their 2016 lows. Higher crude oil (IYE) (IXC) (SCO) prices have a positive impact on oil producers’ earnings such as Occidental Petroleum (OXY), Hess (HES), Synergy Resources (SYRG), and PDC Energy (PDCE).
Key bearish drivers for crude oil in 2017
- rise in US crude oil production
- high US crude oil inventories
- Trump’s energy policy
- OECD crude oil inventories
- rising Libyan and Nigerian crude oil production
- global crude oil supply outages
- Iran’s crude oil production
Crude oil price forecasts
Tortoise Capital Advisors thinks that US WTI and Brent crude oil prices could trade between $50 and $60 per barrel in 2017. In the last part of this series, we’ll look at some crude oil price forecasts.
In the next part of the series, we’ll look at Cushing crude oil inventories and their impact on crude oil prices.