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Crude Oil Traders: 2 Key Indicators to Watch

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Crude Oil Traders: 2 Key Indicators to Watch PART 1 OF 5

Crude Oil Inventories Could Drive Crude Oil Futures Higher

US crude oil futures 

WTI (West Texas Intermediate) crude oil futures (UCO) (DWT) contracts for January delivery rose 0.3% to $57.62 per barrel on December 5, 2017. Oil prices are near a 30-month high. Brent (BNO) oil futures rose 0.6% to $62.86 per barrel on December 5, 2017. Prices rose due to the expectation of a fall in US crude oil inventories. The EIA will release its crude oil inventory report today (December 6, 2017). The fall in OPEC’s crude oil production in November 2017 also helped oil prices. In Part 2 of this series, we’ll discuss OPEC’s crude oil production. Extending ongoing production cuts until December 2018 also supported oil (USL) (DBO) prices.

The United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose 0.4% and 0.7%, respectively, on December 5, 2017.

Crude Oil Inventories Could Drive Crude Oil Futures Higher

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Crude oil inventories

The API (American Petroleum Institute) published its crude oil inventory report on December 5, 2017. It reported that US crude oil inventories fell by 5,500,000 barrels on November 24–December 1, 2017. Bloomberg surveys expected that US crude oil inventories could have fallen by 2,500,000 barrels during the same period. Crude oil inventories at Cushing also fell by 2,400,000 barrels during the same period, according to Bloomberg.

If the EIA reports a larger-than-expected fall in Cushing and US crude oil inventories, it would support oil (OIL) (DTO) prices. US crude oil inventories have fallen 15.3% from their record level in March 2017, which is also bullish for oil prices. Higher oil prices benefit energy producers (XOP) (RYE) like Northern Oil & Gas (NOG), Devon Energy (DVN), Hess (HES), and Bonanza Creek Energy (BCEI).

Wall Street’s performance 

The Dow Jones Industrial Average Index (DIA) fell 0.45% to 24,180.64, while the NASDAQ (QQQ) fell 0.19% to 6,762.21 on December 5, 2017.

The S&P 500 (SPY) fell 0.37% to 2,629.57 on the same day. Ten of the 11 sectors in the S&P 500 fell on December 5, 2017. The telecommunication (VOX) (IYZ), utilities (XLU) (VPU), and industrials (ITA) (XLI) sectors dragged SPY the most on December 5, 2017.

Series overview 

In this series, we’ll discuss OPEC’s crude oil production, US crude oil production and exports, US gasoline inventories and demand, and the latest crude oil price forecasts.

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