OPEC Report: Could US Crude Oil Break above the $50 Mark?
US crude oil
On September 12, 2017, US crude oil (USO) (USL) October futures rose 0.3% and closed at $48.23 per barrel. However, from September 5 to September 12, 2017, US crude oil (DBO) October futures fell 0.9%.
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OPEC released its monthly oil market report on September 12, 2017. Based on secondary sources, OPEC crude oil production in August 2017 stood at ~32.8 million barrels per day—a decline of 79,100 barrels per day compared to July 2017.
However, the production level is still 0.26 million barrels per day higher than the OPEC-pledged output limit of 32.5 million barrels per day. OPEC expects world oil demand to grow ~1.4 million barrels per day in 2017, which is 50,000 barrels per day higher than its previous estimate.
The OECD estimates that commercial oil stocks in its member countries, expressed in days of forward cover, totaled 62.9 days in July—2.7 days more than the five-year average. In June 2017, it was 4.1 days more than the five-year average.
This contraction shows the diminishing level of inventories that could boost US crude oil above the $50 mark. Since the start of July 2017, US crude oil active futures have struggled to close over the psychologically important level of $50.
On September 12, 2017, US crude oil active futures settled 1.3%, 1.6%, and 1.8% above their 20-day, 50-day, and 100-day moving averages, respectively. On September 11, 2017, US crude oil futures again moved above the 20-day moving average.
While the 50-day moving average was trading 4.1% below the 200-day moving average, the difference between these two moving averages has contracted in the last five trading sessions. These trends are bullish technical signs for US crude oil futures.