Energy Sector Recap: September 4–8, 2017

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Energy Sector Recap: September 4–8, 2017 PART 1 OF 7

What’s Holding US Crude Oil below the $50 Mark?

US crude oil

On September 1–8, 2017, US crude oil (USO) (USL) October futures rose 0.4% and closed at $47.48 per barrel on September 8, 2017. Last week, most of the refineries located in the Gulf Coast restarted their operations after Hurricane Harvey, which supported US crude oil prices last week.

However, Hurricane Irma hit Florida on September 10, 2017. It could reduce the gasoline demand because of supply disruptions. Hurricane Irma could hold US crude oil below the $50 mark.

What&#8217;s Holding US Crude Oil below the $50 Mark?

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Hurricane Irma could also impact US crude oil imports. On September 8, 2017, the Brent-WTI spread rose to $6.3 per barrel—the highest level since August 20, 2015. In the past five trading sessions, Brent crude oil (BNO) active futures rose 2% and outperformed US crude oil prices.

Last week, Hurricane Harvey impacted US crude oil production and inventory levels. In the week ending September 1, 2017, US crude oil production fell by 749,000 barrels per day, while the inventories rose by 4.6 MMbbls (million barrels). The EIA (U.S. Energy Information Administration) released the data on September 7, 2017.

In the week ending September 8, 2017, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) fell 0.6% and 0.9%. In the next part, we’ll focus on how broader market equity indexes performed.

The US oil rig count fell by three to 756 in the week ending September 8, 2017. A sustained fall in the oil rig count could support crude oil prices.

Natural gas

On September 1–8, 2017, natural gas (UNG) (BOIL) October futures fell 5.9% and closed at $2.89 per MMBtu (million British thermal units) on September 8, 2017.

Hurricane Irma could bring down natural gas consumption in some parts of the US. The potential mild weather after Hurricane Irma could be a bearish factor for natural gas prices. In the week ending September 1, 2017, natural gas inventories rose by 65 Bcf (billion cubic feet). It exceeded the market’s expectation of 2 Bcf. The inventory data were reported by the EIA on September 7, 2017.


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