Crude oil price action
US benchmark WTI (West Texas Intermediate) crude oil futures contracts for April delivery rose by 5.5% and closed at $37.9 per barrel on March 7, 2016. Similarly, global benchmark Brent crude oil prices rose by 5.5% and settled at $40.8 per barrel. Prices rallied due to expectations of lower US crude oil production figures in April 2016. Oil-tracking ETFs like the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose by 4.8% and 9.3%, respectively, on March 7. The SPDR S&P 500 ETF (SPY) rose by 0.1% to $200.63 on March 7, 2016.
Monthly drilling report
The EIA (U.S. Energy Information Administration) released its monthly Drilling Productivity Report on March 7, 2016. It reported that US crude oil production from the major shale regions could fall by 106,000 bpd (barrels per day) in April 2016—compared to the previous month. Since 2007, this is the second-largest monthly fall after a record 121,000 bpd fall in January 2015. The expectation of slowing US crude oil production boosted crude oil prices on March 7. The US crude oil production is expected to decline in the Eagle Ford, Bakken, and Niobrara Shale regions. To learn more about US crude oil production, read Slowing US Crude Oil Production Supported Crude Oil Prices. Read the next part of the series to learn more about key oil price drivers.
Brent and WTI crude oil prices peak in 2016
Crude oil prices rose by ~42% since the lows in February 2016. The major reasons were the slowing US production and the new crude oil production deal covered in the next part of the series. Brent and WTI crude oil prices hit the 2016 peak on March 7, 2016. WTI previously peaked at $36.76 per barrel on January 4, 2016. Similarly, Brent crude oil prices peaked at $38.72 per barrel on March 4, 2016.
The increase in crude oil prices benefits oil and gas exploration and production companies like Ultra Petroleum (UPL), Whiting Petroleum (WLL), Swift Energy (SFY), Hess (HES), Energy XXI (EXXI), and Goodrich Petroleum (GDP). On the other hand, low oil prices and steady product prices could support US oil refiners like Valero Energy (VLO), Tesoro (TSO), and Northern Tier Energy (NTI).
This series covers crude oil inventories, China’s crude oil imports, Russia’s crude oil production, the oil supply and demand gap, and long-term crude oil price forecasts.