Crude oil prices fall
March WTI (West Texas Intermediate) crude oil futures trading on NYMEX fell by 1.7% and settled at $31.72 per barrel yesterday. Brent crude oil futures trading on ICE (Intercontinental Exchange) also fell by 1.7% and settled at $34.46 per barrel in yesterday’s trade. Crude oil prices fell due to rising the US crude oil inventory despite the depreciating US dollar. ETFs like the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) fell by 2.4% and 4.6%, respectively. Broader indexes like the SPDR S&P 500 ETF (SPY) were flat in yesterday’s trade.
Possible alliance between OPEC and non-OPEC
The latest developments suggest that a possible alliance between OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC nations for collective production trimming is doubtful. Venezuelan government sources say six OPEC nations and two non-OPEC nations would be willing to attend a meeting to decide on collective production cuts in order to support crude oil prices and oil producers. However, it’s highly unlikely that these collective production cuts would be beneficial. Oil prices had already risen in the wake of production trimming, but now the rising US crude oil inventory is weighing on crude oil prices. Read the next part of this series for the latest on Cushing and nationwide crude oil inventories.
US dollar index
The US dollar index also fell in yesterday’s trade. However, crude oil prices didn’t react to it. The US dollar index fell for the second day due to US service industries growing at their slowest pace in the past two years. The depreciating US dollar supports crude oil prices, as it makes oil more affordable for oil-importing countries.
Crude oil prices have fallen by 16% in 2016 due to long-term oversupply concerns. Prices fell for the third day in the last four trading sessions yesterday. The historically low prices have affected the margins of oil producers like ConocoPhillips (COP), Murphy Oil (MUR), Chevron (CVX), Royal Dutch Shell (RDS.A), and ExxonMobil (XOM).