Oil price movements last week
The week started off with WTI oil prices increasing to $90.34 per barrel on Monday, $0.6 higher than the previous market close. Prices increased after a slump in the U.S. dollar. A weaker dollar makes the dollar-priced crude less expensive and therefore more attractive for buyers holding foreign currencies.
Despite the uptick, oversupplied markets and lackluster demand weighed on prices, causing them to fall back again the next day to $88.85.
Prices further fell to $87.31 on Wednesday—the lowest levels since April 2013. The decline came after the The IMF (International Monetary Fund) said on Tuesday that the world’s economy will expand by 3.8% next year, down from a forecast of 4% in July. The IMF cited weak economic growth for the demand projection cutback.
Despite factors that could have supported WTI oil prices, oil prices failed to recover and traded close to $86 on Thursday. These factors include an upbeat Cushing inventory report and the dollar index’s further decline on Thursday.
The IMF’s report states that demand is set to remain weak even as production—especially in the U.S. and OPEC countries—surges. So WTI oil prices will remain under pressure.
Key stocks and ETFs
Lower oil prices are negative for oil producers like Occidental Petroleum (OXY), Murphy Oil (MUR), and Chevron Corp. (CVX). Most of these companies are part of important ETFs such as the Energy Select Sector SPDR ETF (XLE) and the iShares U.S. Energy ETF (IYE).
Check out Market Realist’s Energy & Power page for more articles on the energy industry.
The following part of this series discusses the WTI-Brent spread.