Why Crude Oil Futures Hit a 28-Month High
US and Brent crude oil futures
December WTI (West Texas Intermediate) crude oil (USO) (OIL) futures contracts rose 0.4% to $54.54 per barrel on November 2, 2017. Brent oil futures rose 0.2% to $60.62 per barrel on the same day. The prices are at a 28-month high due to tightening global supplies from ongoing production cuts. The fall in OPEC’s crude oil production in October 2017 and higher compliance with the production cuts also helped oil prices. The geopolitical tension in Iraq benefited crude oil prices. US crude oil inventories fell last week, which benefited oil (USL) (SCO) (BNO) prices. The EIA (U.S. Energy Information Administration) published the data yesterday. The improving global crude oil demand has been helping oil prices.
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OPEC, Saudi Arabia, Russia, Iraq, and Kuwait signaled extending the ongoing production cuts nine more months. The extension drove oil prices (DBO) (UWT) higher. OPEC’s meeting will be held on November 30, 2017. Major producers might officially announce the production cut extension at this meeting.
US crude oil prices have risen ~30% since the lows in June 2017 due to the bullish drivers discussed above. Higher oil prices benefit oil producers (XLE) (VDE) like Chesapeake Energy (CHK), Gulfport Energy (GPOR), and Occidental Petroleum (OXY).
What’s driving Wall Street?
The Dow Jones Industrial Average (DIA) rose 0.35% to 23,516.26 on November 2, 2017. The NASDAQ (QQQ) fell 0.02% to 6,714.94 on the same day. It hit a record of 6,748.8 on November 1, 2017. The S&P 500 (SPY) rose 0.02% to 2,579.85 on November 2, 2017. It hit a record of 2,587 on November 1, 2017. Wall Street has been driven by hopes of tax cuts, the improving US economy and job market, and strong 3Q17 earnings results.
EIA’s crude oil inventory report
The EIA (U.S. Energy Information Administration) published its weekly crude oil inventory report on November 2, 2017. In this series, we’ll discuss US crude oil inventories, production, and gasoline and distillate inventories.
In the next part, we’ll discuss Russia’s impact on the oil market.