uploads///WTI Brent Crude Oil Price Movements

Crude Oil Prices Set for Weekly Gains Due to Supply Cut Talks

By

Jan. 29 2016, Updated 8:37 a.m. ET

Crude oil prices rose

In the week ending January 22, 2016, West Texas Intermediate crude oil prices rose ~9% to close at $32.19 per barrel on January 22, 2016. Crude oil prices will also likely gain due to positive talks from Russia on production cuts. Crude oil prices rose more than 9% to close at $33.22 per barrel on January 28, 2016.

Article continues below advertisement

Iran’s record output level and positive talks from Russia

At the beginning of this week, crude oil prices fell by more than 5% on January 25, 2016. Iran’s record crude oil output of 4.13 MMbpd (million barrels per day) in December 2015 led investors to focus on oversupplies in the global crude oil markets. Iran’s crude oil production averaged 3.7–3.8 MMbpd in the months before December 2015. However, the sudden rise in the production levels renewed the focus on oversupplies.

Crude oil prices gained due to speculation about the news. Russia wants to talk with OPEC about cooperating to trim the oversupplies. Investors even ignored massive inventory builds of 11.4 million barrels reported by the American Petroleum Institute on January 26, 2016. They also ignored the U.S. Energy Information Administration’s crude oil inventory report. The announcement from Russia’s oil minister confirmed the news. As a result, crude oil prices continued to rise for the past three days. The prices gained ~9.4% from this week’s low of $30.34 per barrel on January 25, 2016. The bullish sentiment among investors will certainly help crude oil prices rise on today’s trade to post gains on a weekly basis.

Impact

The bullish sentiment among investors, due to positive talks from Russia, will cause the prices to rise. This will bring back the momentum in the oil industry. It’s suffering from long-term lower prices. The rise in prices will increase crude oil producers’ revenue like Murphy Oil (MUR), Continental Resources (CLR), Whiting Petroleum (WLL), Marathon Oil (MRO), and Anadarko Petroleum (APC).

Murphy Oil accounts for 0.4% of the Energy Select SPDR ETF (XLE).

In the next part of this series, we’ll provide updates on the WTI-Brent spread.

Advertisement

More From Market Realist

  • Open sign on a sidewalk
    Macroeconomic Analysis
    Top Reopening Stocks to Play the Shifting Market Sentiment
  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.