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US Crude Oil Futures: Why the Recovery Could Be Short-Lived

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US Crude Oil Futures: Why the Recovery Could Be Short-Lived PART 1 OF 7

US Inventories and OPEC Boost Crude Oil Futures

US crude oil futures 

WTI (West Texas Intermediate) crude oil (XOP) (XLE) (VDE) futures contracts for June delivery rose 3.2% and settled at $47.33 per barrel on May 10, 2017. It’s the biggest one-day gain since December 1, 2016. Crude oil futures rose due to the larger-than-expected fall in US crude oil inventories and the fall in gasoline and distillate inventories. The S&P 500 (SPY) (SPX-INDEX) also moved in the same direction as crude oil. It rose 0.11% on May 10, 2017. Crude oil and natural gas are major parts of the energy sector. The energy sector made up ~6.3% of SPY as of May 5, 2017.

US Inventories and OPEC Boost Crude Oil Futures

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Major oil producers’ deal 

Iraq and Algeria signaled their intention to support major producers’ production cut deal in 2H17. Russia and Saudi Arabia said that they would extend major producers’ production cut deal beyond 2017. All of these factors supported crude oil futures on May 10, 2017.

However, rising production from the US, Libya, and Nigeria could pressure oil prices. Moves in crude oil prices impact oil and gas producers’ earnings like Warren Resources (WRES), Chevron (CVX), QEP Resources (QEP), and Continental Resources (CLR).

Crude oil volatility index  

The crude oil volatility index fell 0.6% to 34.02 on May 10, 2017. It hit 24.7 on March 1, 2017—the lowest level since October 2014.

In 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 May 11, 2017.

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