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Crude Oil Prices Drop on Speculation of a US Shale Rebound

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Crude oil prices drop

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.

WTI (West Texas Intermediate) crude oil futures for June delivery declined slightly by 0.24% and closed at $59.25 per barrel on May 11, 2015. Prices dropped marginally on the speculation that US crude oil production might increase. WTI crude oil following ETFs like the United States Oil Fund LP (USO) and the ProShares Ultra DJ-UBS Crude Oil (UCO) reflected the oil price movement. They fell by 0.20% and 0.31%, respectively, on Monday.

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The EIA (U.S. Energy Information Administration) released the monthly drilling report yesterday. The data showed that oil production from seven major shale regions is expected to decline by 86,000 bpd (barrels per day) in June 2015. Production for May 2015 is expected to be 5.63 MMbpd (million barrels per day).

The government data shows a fall in oil production in the near term. However, upstream players like Occidental Petroleum (OXY), Noble Energy (NBL), and Carrizo Oil & Gas (CRZO) increased their production outlook for 2015 on the grounds of increasing crude oil prices. The increase in production consensus ignites the long-term supply glut worries.

The EIA published the weekly crude oil inventory report on May 6, 2015. According to the report, the oil stockpile declined by 3.9 MMbbls (million barrels) for the week ending May 1. This was the biggest weekly crude oil decline in 2015. The next oil inventory report will be released tomorrow—May 13, 2015.

Oil prices dropped for the fifth day over the last ten days. Over the same period, prices decreased by 0.55% more on the average up days than on the average down days, over the last ten trading sessions. On Monday, WTI had a mediocre performance with respect to all of the other commodities. Prices increased by 10.81% YTD (year-to-date)—led by the improved demand from China and slowing US output.

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