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Is It the Beginning of More Problems for Crude Oil Bulls?

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Is It the Beginning of More Problems for Crude Oil Bulls? PART 1 OF 6

Will Crude Oil Futures Fall Next Week?

US and Brent crude oil futures  

US crude oil (UWT) (DBO) futures for January delivery fell 2.9% to $55.96 per barrel on December 6, 2017. Prices are near a three-week low. Brent (BNO) oil futures fell 2.6% to $61.2 per barrel on December 6, 2017—a one-month low.

Oil prices (DWT) (SCO) fell due to a larger-than-expected rise in US gasoline inventories. The EIA released the data on December 6, 2017. It also said that US crude oil production hit a fresh record, which added to crude oil’s bearish momentum. All of these factors could pressure oil (USO) (USL) prices next week.

Will Crude Oil Futures Fall Next Week?

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OPEC’s crude oil production 

However, OPEC’s crude oil production fell in November 2017, according to Reuters. Bloomberg estimated that OPEC’s crude oil production fell by 80,000 bpd (barrels per day) to 32,470,000 bpd in November 2017—compared to October 2017. It’s the lowest level since May 2017. Production fell due to the drop in oil production from Angola during maintenance.

Extending current production cuts until December 2018 and higher compliance with production cuts will help oil prices in 2018. Higher oil prices benefit energy companies (XLE) (VDE) like WPX Energy (WPX), Callon Petroleum (CPE), and Whiting Petroleum (WLL).

Wall Street 

The Dow Jones Industrial Average Index (DIA) fell 0.16% to 24,140.91 on December 6, 2017. In contrast, NASDAQ (QQQ) rose 0.2% to 6,776.38 on the same day.

The S&P 500 (SPY) fell 0.01% to 2,629.27 on December 6, 2017. The energy (VDE) (IEZ) sector fell 1.3% on the same day. The energy, telecommunication (VOX) (IYZ), and consumer discretionary (XLY) (VCR) sectors dragged SPY yesterday. However, the S&P 500 has risen 17% year-to-date due to strong earnings growth and progress in the US tax bill.

In this series  

In this series, we’ll discuss US crude oil inventories, refinery crude oil demand, and production. We’ll also discuss gasoline and distillate inventories. Next, we’ll analyze how Saudi Arabia could impact oil prices.

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