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Crude Oil Declines on Strong Stockpile Data

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Crude oil down

Below is our crude oil price and fundamental analysis. For an in-depth fundamental look at crude oil and related companies, sectors, and drivers, please refer to our Energy and Power page.

June WTI (West Texas Intermediate) crude oil futures declined by 1.99% and settled at $55.26 per barrel on Tuesday, April 21, 2015. Oil prices fell due to increasing stockpile data and easing Middle East tensions. The benchmark following ETFs like the ProShares Ultra DJ-UBS Crude Oil (UCO) and the United States Oil Fund LP (USO) fell even more than crude oil. They fell by 3.57% and 2.41%, respectively, at the close of trade.

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The API (American Petroleum Institute) released the crude stockpile data on April 21 for the week ending April 17, 2015. The data showed that the weekly US stockpile increased by 5.5 MMbbls (million barrels)—compared to market estimates of an increase of 2.5 MMbbls. The massive increase in the stockpile fueled the long-term sentiments of oversupply in the market. As a result, oil prices declined yesterday. The EIA’s (U.S. Energy Information Administration) weekly crude oil report is due today.

Increasing inventories and the contango market benefit oil and gas shipping stocks like Nordic American Tanker (NAT), Teekay (TK), and Frontline (FRO). Frontline and Nordic American Tanker gained more than 14% and 29%, respectively, YTD (year-to-date).

Oil volatility

WTI oil prices fell for the fifth time over the last ten trading sessions. Prices fell 0.57% less on the average down days compared to the average up days during the same period. WTI crude oil performed poorly across all of the commodities on April 21, 2015. Crude oil prices gained more than 5% YTD—led by declining US production.

Energy ETFs like the SPDR Oil and Gas ETF (XOP) and the Energy Select Sector SPDR (XLE) followed the crude oil price movement. They also fell in yesterday’s trade by 3% and 1%, respectively.

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