Crude oil prices
WTI (West Texas Intermediate) crude oil futures contracts for May delivery rose by 1.6% to close at $40.36 per barrel on Monday, April 11, 2016. Brent crude oil futures rallied by 2.1% to $42.83 per barrel and tested their four-month high. Prices rallied ahead of the oil producer meeting, which aims to freeze oil output to support oil prices.
Oil tracking ETFs like the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose by 2.5% and 4.6%, respectively, on April 11, 2016. In contrast, the SPDR S&P 500 ETF (SPY) fell by 0.29% and closed at $203.9 on the same day.
US dollar index
The US dollar index depreciated to its lowest level in the last eight months. The US dollar and crude oil prices are inversely correlated. The depreciating US dollar makes crude oil cheaper for oil importing economies. Consequently, Brent and WTI crude oil prices rallied on Monday, April 11, 2016. The PowerShares DB US Dollar Index Bullish (UUP) tracks the performance of the US dollar index. UUP and USO reflect the inverse correlation between crude oil and the US dollar. The uptick in crude oil prices benefits oil producers like EP Energy (EPE), Matador Resources (MTDR), Laredo Petroleum (LPI), Ultra Petroleum (UPL), and Bill Barrett (BBG).
Oil producer meeting
A meeting of major oil producers will take place in Doha, Qatar, on April 17, 2016. The meeting will focus on freezing crude oil production at current levels to balance the supply-demand gap. So far, 15 OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers have confirmed their presence at the Doha meeting. Read Do Current Crude Production Levels Bode Well for Doha Meeting? and Crude Oil Prices: How They Direct Crude Oil Producers’ Actions to learn more.
Crude oil prices affect ETFs like the PowerShares DWA Energy Momentum (PXI), the Guggenheim S&P 500 Equal Weight Energy (RYE), the VelocityShares 3x Inverse Crude Oil ETN (DWTI), and the Direxion Daily Energy Bull 3x Shares ETF (ERX).
This series focuses on crude oil price volatility, API (American Petroleum Institute) crude oil inventory estimates, Cushing crude oil stocks, the Doha meeting, US crude oil production, the US crude oil rig count, the U.S. Commodity Futures Trading Commission’s “Commitment of Traders” report, and the crude oil price forecast.