Crude oil prices rally
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.
August WTI (West Texas Intermediate) crude oil futures trading in NYMEX rose by 1.95% and closed at $59.47 per barrel on Tuesday, June 30, 2015. Prices surged on the summer demand for crude oil, despite the oversupply concerns. WTI tracking ETFs like the United States Oil Fund LP (USO) and the ProShares Ultra DJ-UBS Crude Oil (UCO) also rose by 1.90% and 3.65% at the close of trade on June 30, 2015.
Lower WTI crude oil prices could boost the demand for gasoline during summer travel. US gasoline prices are at the lowest levels in the last five years. It’s expected that 41.9 million people will travel more than 50 miles during the Independence Day weekend. These are the highest figures since 2007. Crude oil prices could be supported by summer demand in the short term.
In contrast, the API (American Petroleum Institute) released its weekly US crude oil stock data on June 30, 2015. The API reported that the oil stockpile rose by 1.9 MMbbls (million barrels) for the week ending June 26, 2015. Last week, oil stocks fell by 3.2 MMbbls for the week ending June 19, according to API sources. The EIA (U.S. Energy Information Administration) reported that crude oil inventories fell by 4.9 MMbbls, during the same period. The estimates of the rising oil stockpile will negatively impact crude oil prices.
This is the fifth up day for crude oil prices in the last ten trading sessions. Prices fell by 0.81% more on the average down days than on the average up days, over the same period. WTI crude oil fared well against other commodities in yesterday’s trade. Prices rose more than 10% YTD (year-to-date)—led by rising demand from Asia and falling US oil stocks.
Volatility in crude oil prices impacts oil and gas producers like Murphy Oil (MUR), Apache (APA), and Hess (HES). Combined, they account for 6.53% of the Energy Select Sector SPDR ETF (XLE). These companies also have a oil production mix that’s greater than 54% of their production portfolio.