Crude oil prices
WTI (West Texas Intermediate) crude oil price closed at $46.59 per barrel on October 30, which is 5.6% higher than the price on October 26 at $43.98 per barrel. Brent crude also rose, from $47.54 per barrel on October 26 to $49.56 per barrel on October 30, a rise of 4.1%.
Impact of bullish WTI crude prices
A sharp rise in WTI crude prices by 5% on October 30, 2015, is good news for US oil producers. A rise in crude prices results in more revenue for oil producers such as Apache Corporation (APA), Hess Corporation (HES), ExxonMobil (XOM), Chevron (CVX), Anadarko Petroleum Corporation (APC), Occidental Petroleum (OXY), and Murphy Oil (MUR).
A rise in crude prices also has a positive impact on ETFs such as the iShares US Oil & Gas Exploration & Production ETF (IEO), the United States Oil ETF (USO), and the United States 12 Month Oil ETF (USL).
A rise in crude oil prices led to higher production volume, which is good for MLPs as well. MLPs such as Plains All American Pipeline (PAA) transport crude oil. Due to high transport volumes, revenues will increase for MLPs.
Why the sharp rise in WTI crude prices?
WTI crude prices rose on October 30, 2015, after the US oil rig count fell for a ninth straight week. Drillers removed 16 rigs, bringing the total rig count to 578. This is 1,168 rigs less than the previous year, which indicates crude oil production could decrease in the coming months, diminishing the overabundant worldwide supply. The drop in rig count indicates that lower crude prices are forcing drillers away from drilling. This could continue for several months.
US crude oil output data for the month of August has also helped to boost crude oil prices. August’s decline in output was expected to decrease massive stockpiles, and continue further. The WTI-Brent spread is discussed in the next part of this series.