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Crude Oil Futures: The Next Big Potential Catalyst

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Crude Oil Futures: The Next Big Potential Catalyst PART 1 OF 5

Crude Oil Futures and Wall Street Move in Tandem

Brent and WTI crude oil futures 

November WTI (West Texas Intermediate) crude oil (SCO) (USL) futures contracts rose 2.7% and closed at $50.92 per barrel on Tuesday, October 10, 2017. Brent oil futures contracts rose 1.5% and settled at $56.61 per barrel on the same day.

The expectation of a fall in US crude oil inventories between September 29, 2017, and October 6, 2017, supported oil prices. Saudi Arabia decided to cut crude oil exports by 560,000 bpd (barrels per day) in November 2017, which also helped oil (BNO) (DWT) prices.

Crude Oil Futures and Wall Street Move in Tandem

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WTI crude oil futures 

WTI crude oil (USO) (UCO) futures have fallen ~10.5% YTD (year-to-date), though right now they’ve reached a one-week high. WTI oil futures have gained 11.1% over the past three months due to bullish catalysts.

Remember, any volatility in crude oil prices impacts oil producers (XLE) (VDE) (IEZ) like Noble Energy (NBL), Anadarko Petroleum (APC), and Marathon Oil (MRO).   

OPEC 

On October 10, 2017, OPEC’s (Organization of Petroleum Exporting Countries) general secretary suggested that US shale oil producers need to cap production. US crude oil production has risen 13% since September 2016.

US crude oil production is expected to hit a record 9.8 MMbpd (million barrels per day) in 2018. Any rise in production from the US could offset some of the impact of OPEC’s output cut deal.

Wall Street performance 

The S&P 500 (SPY) rose 0.23% and closed at 2,550.64 on October 10, 2017, hitting a record high of 2,555 the same day. The Dow Jones Industrial Average Index (DIA) rose 0.31% and closed at 22,380.68 on October 10, also hitting a record high of 22,849.9 the same day. The NASDAQ (QQQ) rose 0.11% and closed at 6,587.25 on October 10, also htting a record high of 6,607.1 the same day.

The S&P 500 has risen 14% so far in 2017. The optimism surrounding the expectation of strong third quarter earnings results has been driving Wall Street. The consumer staples (XLP) (VDC), utilities (XLU) (VPU), and financials (XLF) (VFH) sectors supported SPY on October 10.

Keep reading this series for a closer look at crude oil exports from Saudi Arabia, Iran, and Iraq. We’ll also discuss the API’s (American Petroleum Institute) crude oil inventories and crude oil price forecasts.

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