Energy Snapshot: June 5 to June 9, 2017
Crude oil ended in the red last week
On June 9, 2017, US crude oil (USO) (USL) futures for July settled at $45.83 per barrel, falling 3.8% in the week between June 2–June 9, 2017. On June 9, Brent crude oil (BNO) active futures closed at $48.15 per barrel, down 3.6% for the week.
On June 7, US crude oil active futures lost 5.1% due to the unexpected rise in US crude oil and gasoline inventories. During intraday trading, US crude oil active futures touched a low of $45.27 per barrel, which was the third-lowest price in 2017.
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Other factors such as a potential slowdown in demand by independent oil refineries in China could be important for crude oil.
Natural gas steady
On June 9, 2017, US natural gas (UNG) (BOIL) July futures closed at $3.04 per million British thermal units (or MMBtu). Last week, US natural gas futures for July rose 1.3%. Most of these gains could be attributed to technical buying as natural gas prices are near the psychological level of $3.00.
Mild weather and a rise in inventories above market expectations could concern natural gas bulls. Plus, the EIA’s (Energy Information Administration) STEO (Short-Term Energy Outlook) data suggests an increase in natural gas production in 2017 and 2018.
In the week ended June 9, 2017, the natural gas rig count added three rigs to reach 185. Notably, the rise in the oil rig count could impact natural gas prices adversely.
Major equity indexes and energy commodities
Between June 2–June 9, 2017, the S&P 500 Index (SPY) fell 0.3%, and the Dow Jones Industrial Average Index (DIA) rose 0.3%. Equity indexes that have some weight to the energy sector could be impacted by movements in energy commodities.
Below are the performance numbers of energy subsector ETFs between June 2–June 9, 2017.
- The Alerian MLP ETF (AMLP) fell 0.8%.
- The Energy Select Sector SPDR ETF (XLE) rose 2.0%.
- The VanEck Vectors Oil Services ETF (OIH) rose 0.2%.
- The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 0.9%.
In the last week, the Energy Select Sector SPDR ETF (XLE) was the second-largest gainer among the sector-based SPDR ETFs. Between June 2–June 9, 2017, the Technology Select Sector SPDR ETF (XLK) fell 2%, which was the highest among the sector-based SPDR ETFs.
The chart below illustrates the breakdown for the top movers in the energy sector between June 2 and June 9, 2017—the Energy Select Sector SPDR ETF (XLE), the VanEck Vectors Oil Services ETF (OIH), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the Alerian MLP ETF (AMLP).
S&P Global changed the rating of Tesoro’s (TSO) corporate credit and senior unsecured issues from “BB+” to “BBB-.” S&P Global maintained Tesoro’s “stable” outlook. On June 5, 2017, TSO announced the rating change by S&P Global. On the same day, Tesoro stock rose 2.8%.
In the last week, natural gas–weighted upstream stock Southwestern Energy (SWN) ranked third among the top gainers in the energy sector. On June 8, 2017, SWN announced that R. Craig Owen, its chief financial officer, plans to leave the company.
Natural gas–weighted stock WPX Energy (WPX) fell 8.5% between June 2–June 9, 2017. WPX’s high correlation with US crude oil active futures could explain the sharp fall in stock prices despite the 1.3% rise in US natural gas futures during this period.
US crude oil active futures fell 3.8% between June 2–June 9, 2017. WPX was the second-highest loser in the energy sector during this period.
Key events in the upcoming week
The chart below details key events in the energy sector between June 12–June 16, 2017.
For ongoing updates from the energy sector, please check Market Realist’s Energy and Power page.