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Crude Oil Prices Fall: Profit-Booking and Strong US Dollar

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Nov. 20 2020, Updated 10:04 p.m. ET

Crude oil prices 

This series analyzes crude oil and natural gas prices and fundamentals. For an in-depth fundamental look at oil and gas and related companies, sectors, and drivers, please refer to our Energy and Power page.

July WTI (West Texas Intermediate) crude oil futures trading in NYMEX fell by 1.39% and closed at $59.61 per barrel on Friday, June 19, 2015. The fall in crude oil prices was led by the strengthening US dollar and profit-booking. WTI crude tracking ETFs like the United States Oil Fund LP (USO) and the ProShares Ultra DJ-UBS Crude Oil (UCO) followed the price trajectory of crude oil prices and fell in Friday’s trade. They fell by 1.67% and 3.22%, respectively, on June 19, 2015.

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Greece’s debt default crisis supported the US Dollar Index. This resulted in the US dollar appreciating against the global currencies. The strong dollar made dollar denominated crude oil expensive and oil prices fell yesterday. Even profit-booking added more pressure to crude oil prices as July WTI futures contracts near expiry on July 22, 2015.

Last week, the EIA (U.S. Energy Information Administration) published that US commercial crude oil inventories fell by 2.7 MMbbls in the week ending June 12, 2015. The next report is expected to release on Wednesday, June 24, 2015. The preliminary estimates suggest falling inventories at Cushing, Oklahoma—the delivery point for NYMEX crude oil futures.

This is the sixth down day for WTI crude over the last ten trading sessions. During the same period, prices rose by 0.52% more on the average up days than on the average down days. July WTI faired well among all of the other commodities in Friday’s trade. Prices rose by 11.66% YTD (year-to-date)—led by falling US inventories and rising Asian demand.

The volatility in the crude oil market impacts integrated oil and gas players like ExxonMobil (XOM), Occidental Petroleum (OXY), and Chevron (CVX). Combined, they account for 32.22% of the Energy Select Sector SPDR ETF (XLE). These companies have a crude oil production mix that’s more than 54% of their total production.

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