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Crude Oil Prices Slip Back as Oil Oversupply Concerns Deepen

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Crude oil price action

This series provides an analysis of crude oil prices and fundamentals. 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 the month of June traded down 1.02% on the NYMEX (New York Mercantile Exchange) and closed at $59.88 per barrel on May 14, 2015. Concerns about global crude oil oversupply led the decline.

ETFs including the United States Oil Fund LP (USO) and the ProShares Ultra DJ-UBS Crude Oil (UCO) followed the price trajectory of crude oil prices. The funds fell marginally by 0.39% and 0.91%, respectively, on Thursday’s trading.

Global crude oil surplus concerns drove crude oil prices lower in yesterday’s trading as well. If oil prices increase, there would be more cause for worry about the crude oil market because US drillers would resume oil production.

Slowing global economic growth and slowing demand also fueled the oil market traders. Declining demand from refineries added to the fall in oil prices.

In the meantime, the EIA (U.S. Energy Information Administration) reported on May 13 that the weekly oil stockpile had declined by 2.2 MMbbls (million barrels) in the week ending May 8. In the previous week, US commercial crude oil inventories declined by 3.9 MMbbls for the week ending May 1.

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WTI oil dropped for the sixth time in the last ten trading sessions. Prices increased by 0.54% more on the average up days than on the average down days over the last ten days. WTI was one of the worst performers of any other commodity on Thursday’s trade. Oil prices have gained around 15% YTD (year-to-date)—led by massive imports from China and slowing US output.

The roller coaster ride that is the crude oil market affects oil producers like Hess (HES), EOG Resources (EOG), and ConocoPhillips (COP), whose crude oil production mix makes up more than 47% of total production. These companies account for 10.06% of the Energy Select Sector SPDR Fund (XLE).

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