Oil price movements last week
Oil prices saw another bearish week last week, as they fell to their lowest levels in three years.
Saudi focuses on U.S. markets
On Monday, oil prices declined 2% after Saudi Arabia cut its oil prices for U.S. customers in an aggressive move to win back market share. Saudi Arabia’s U.S. market share has suffered recently, due to high domestic production levels. Indeed, according to a preliminary report by the U.S. Energy Information Administration, U.S. crude oil imports from Saudi Arabia slipped to 609,000 barrels per day in the week ended October 3.
More bad news
Crude prices continued to drop the next day, after the Organization of Petroleum Exporting Countries lowered the demand forecast for its crude. Plus, speculation that the European Central Bank may cut growth forecasts extended the losses further, causing oil prices to drop to their lowest level in three years on Tuesday, $77.19.
Oil prices climbed back up on Wednesday—as we saw in Part 2—supported by a smaller-than-forecast crude inventory increase. But Thursday, the downward drift continued when the U.S. Dollar Index hit a new four-year high on bullish U.S. economic sentiment in contrast with bearish European economic sentiment.
With refineries back from maintenance, the upcoming winter, and key economic and policy developments in the weeks ahead, West Texas Intermediate prices have a crucial period ahead of them.
Key stocks and ETFs
Lower oil prices are negative for oil producers such as Anadarko Petroleum Corporation (APC), Murphy Oil Corporation (MUR), and Hess Corp. (HES). Most of these companies are part of the Energy Select Sector SPDR ETF (XLE) and the iShares U.S. Energy ETF (IYE).
The concluding part of this series discusses the movement in Brent prices last week.