Energy Commodities: Is Oil Diverging from Its Fundamentals?
Crude oil futures
On July 14, 2017, US crude oil August futures settled at $46.54 per barrel, just below the $47 mark.
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The upcoming OPEC (organization of the petroleum exporting countries) and non-OPEC members meeting on July 24, 2017, could be the reason for higher oil prices despite the surge in global crude oil production. Stronger action to support oil prices is expected in the meeting.
In the week ended July 14, 2017, the US oil rig count was 765, two higher than in the week earlier. A rising number of oil rigs could pose a threat to oil bulls.
In the week ended July 7, 2017, US crude oil inventories fell 7.6 MMbbls (million barrels). These data were reported on July 12, 2017. Last week, the contraction in the crude oil inventories spread, the fall in the US dollar (UUP), and the uptick in gasoline demand may have boosted oil prices.
In the week ended July 14, 2017, US equity markets (SPY) (DIA) and gold (DGL) both rose. These rises could signal bullishness across different asset classes. In the next article, we’ll discuss global market returns.
Natural gas futures
This week, the weather could stay hot and humid. On July 14, 2017, natural gas August futures settled at $2.98 per MMBtu (million British thermal units). However, inventory data came in below market expectations and were unable to boost natural gas prices last week.
The natural gas rig count fell by two to 187 last week. However, the rise in the oil rig count could still be a threat to natural gas prices.