Crude oil price movement
April WTI (West Texas Intermediate) crude oil futures contracts trading in NYMEX rose by 3.9% and settled at $35.9 per barrel on March 4, 2016. Brent crude oil prices trading in ICE rose by 4.5% and closed at $38.7 per barrel. Oil prices rallied due to slowing US crude oil output and a better-than-expected US employment report. ETFs like the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) also moved in the direction of crude oil prices. They rose by 4.3% and 8.7%, respectively, on March 4. The SPDR S&P 500 ETF (SPY) rose by 0.3% to $200.36 on the same day.
US jobs data
On March 4, 2016, the U.S. Department of Labor reported that US non-farm payrolls rose by 242,000 for February—compared to Market estimates of 190,000. The better-than-expected rise in US jobs data boosted the broader markets (SPY). The crude oil market also reacted positively. Improving jobs data suggest improvement in consumer spending and possible improvement in economic activity. The slowing US crude oil production also led to a rise in crude oil prices. To learn more about US crude oil production, read Slowing US Crude Oil Production Supported Crude Oil Prices.
Meeting in Russia
On March 3, Nigeria’s petroleum minister Emmanuel Kachikwu reported that the Organization of Oil Exporting Countries is planning a meeting with oil-exporting giant Russia. The meeting will take place in Russia on March 20, 2016. The meeting will renew talks to strategize the recently concluded crude oil production deal between Russia, Saudi Arabia, Venezuela, and Qatar. On February 16, the countries decided to freeze the crude oil production at the levels from January 2016. This production deal is also driving oil prices higher. To learn more about the historic deal, read Why Crude Oil Prices Fell despite the OPEC and Non-OPEC Deal. You can also read Did Saudi Arabia Keep Its Word and Freeze Crude Oil Production? and Why OPEC’s Crude Oil Production Fell in February 2016.
Crude oil prices rose almost 37%
Supply stripping demand caused oil prices to fall by almost 66% since June 2014. However, oil prices rose almost 37% since the lows in February 2016 due to slowing US production and the production deal covered above. The uptick in oil prices benefits oil producers like Swift Energy (SFY), Hess (HES), Energy XXI (EXXI), and Goodrich Petroleum (GDP). In contrast, low oil prices and steady product prices could benefit oil refiners like Western Refining (WNR) and Northern Tier Energy (NTI).
Read the next part of the series to learn more about the oil price forecast. The third part of this series covers the latest update in Cushing crude oil stocks and how it impacts oil prices. We’ll also check out the slowing US crude oil rig count in the fourth part of the series. We’ll cover the hedge fund oil futures and option positions in the fifth part of the series.
The ups and downs in the oil and gas market also impact ETFs like the iShares Global Energy ETF (IXC), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), and the First Trust Energy AlphaDEX Fund (FXN).