April WTI (West Texas Intermediate) crude oil (USL) (SCO) (VDE) futures contracts rose 2.4% and settled at $48.86 per barrel on March 15, 2017. Broader markets (SPY) (SPX-INDEX) also rose 0.8% to 238.9 on March 15, 2017. Oil and gas are major parts of the energy sector. The energy sector contributed to ~6.5% of the S&P 500 as of March 10, 2017.
US crude oil prices rose due to the following factors:
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However, crude oil (XLE) (IXC) (IEZ) futures are trading near a three-month low due to the rise in Saudi Arabia’s crude oil production. Meanwhile, the EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report on March 15, 2017. Prices rose due to the factors mentioned above. However, the recovery in crude oil prices would be short-lived due to the following data from the inventory report.
The Crude Oil Volatility Index fell 9.4% to 30.1 on March 15, 2017. It hit 24.7 on March 1, 2017—the lowest level since October 2014. High crude oil volatility in March 2017 suggests more downfall for crude oil prices. Volatility in crude oil prices can impact oil and gas producers’ earnings like Hess (HES), ExxonMobil (XOM), Warren Resources (WRES), and Goodrich Petroleum (GDP).
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 March 16, 2017.