Crude oil prices
WTI (West Texas Intermediate) crude oil prices closed 3.08% lower on a weekly basis at $44.63 per barrel in the week ending September 11. Brent crude fell by 2.96% on a weekly basis. It closed at $48.14 on September 11.
When crude oil prices (USO) fall, it’s negative for oil producers like Murphy Oil (MUR), Cimarex Energy (XEC), Hess (HES), and Diamondback Energy (FANG). Murphy Oil, Cimarex Energy, and Hess account for 2.60% of the Energy Select Sector SPDR ETF (XLE).
Lower crude oil prices are negative for MLPs as well. MLPs like Plains All American Pipeline Partners (PAA) transport crude oil. Lower prices could eventually translate into lower transported volumes for these MLPs. This means lower revenue.
Between Friday, September 4, and Tuesday, September 8, WTI crude oil prices fell 0.23% to settle at $45.94 per barrel. Markets were closed on Monday due to Labor Day. Prices fell on Tuesday due to concerns about slowing demand from China—the world’s second largest oil consumer.
Brent was trading on Monday. It started the week on a negative note after reports surfaced that Russia had refused to cooperate with OPEC (Organization of the Petroleum Exporting Countries) in an attempt to curb production. This is a very interesting state of affairs given that OPEC refused to curb output last year, despite global pressure. Brent fell almost 4% to settle at $47.63 per barrel on Monday.
On Tuesday, unlike WTI, Brent prices actually rose. They were supported by positive European macroeconomic data. Brent rose ~4% and closed at $49.52 per barrel.
Crude oil prices fell on Wednesday as supply concerns prevailed. There was also the threat of slowing Chinese growth. WTI fell 3.89% to settle at $44.15 per barrel. Brent fell 3.91% to close at $47.58 on Wednesday.
Prices bounced back on Thursday as the markets overlooked the headline bearish inventory data released by the EIA (U.S. Energy Information Administration). Instead, the markets concentrated on the supply numbers. The numbers fell for the week ending September 4. The markets were also led higher by the strong gasoline demand for this time of the year.
We’ll discuss gasoline prices later in this series. The prices were also supported by a weaker dollar. Weakness in the dollar makes dollar-priced commodities like crude oil cheaper for foreign currency holders.
To learn more about last week’s crude inventory report, read US Crude Oil Inventories Up, but So Were WTI Crude Oil Prices.
WTI crude rose 4% and settled at $45.92 per barrel. Brent rose 2.75% and settled at $48.89 per barrel on Thursday.
On Friday, September 11, prices retreated again after Goldman Sachs slashed the forecasts for crude oil prices. The investment bank said that prices might have to fall to as low as $20 per barrel to clear out the global oversupply. For 2016, the bank forecasted WTI to average $45 per barrel—compared to its May projection of $57 per barrel. Brent is estimated to average $49.50. This is down from its previous estimate of $62.
WTI fell ~2.80% on Friday and Brent fell ~1.53% to settle at $44.63 per barrel and $48.14 per barrel, respectively.