Crude oil price drivers
Bullish catalysts for crude oil prices
- Crude oil production in Brazil has fallen 0.9 MMbpd (million barrels per day) over the last six months due to huge debt, corruption scandals surrounding Petróleo Brasileiro Petrobas (PBR), and lower crude oil prices. Secondly, slowing global crude oil production has also boosted crude oil prices in the past two months. To learn more, read Why Key Oil Producers Are Slowing Their Production.
- The rise in gasoline demand also supported crude oil prices. To learn more, read Gasoline Stocks Fell for the Seventh Week: What’s the Impact?.
- Steady Chinese crude oil imports will support oil prices. Read How Will Slowing Production Impact China’s Crude Oil Imports? to learn more.
- NYMEX-traded WTI (West Texas Intermediate) December 2020 crude oil futures contracts were trading at $47.97 per barrel on April 5, 2016. The forward curve suggests higher crude oil prices in the future.
- The IEA (International Energy Agency) forecast that India will surpass Japan as the third-largest crude oil consumer in 2016. India’s crude oil consumption will grow to 4.2 MMbpd in 2016, as compared to 4.1 MMbpd for Japan in 2016.
- In its monthly report, OPEC estimated that the global crude oil demand grew by 1.5 MMbpd to 92.3 MMbpd in 2015. Demand is expected to grow by 1.3 MMbpd to 94.2 MMbpd in 2016.
Impact on crude oil stocks and ETFs
The uncertainty in crude oil prices affects oil and gas producers like Ultra Petroleum (UPL), Whiting Petroleum (WLL), Northern Oil and Gas (NOG), and SM Energy (SM). The volatility also affects ETFs and ETNs like the DB Crude Oil Double Short ETN (DTO), the Direxion Daily Energy Bear 3x ETF (ERY), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the Guggenheim S&P 500 Equal Weight Energy ETF (RYE).
In the next part of this series, we’ll look at bearish factors for crude oil prices.