Crude oil price movement
US benchmark WTI (West Texas Intermediate) crude oil futures contracts for May delivery fell by 3% and closed at $35.7 per barrel on Monday, April 4, 2016. Global benchmark Brent crude oil futures fell by 3.6% and settled at $37.69 per barrel. Prices fell due to rising doubts of the output freeze by oil producers. Oil tracking ETFs like the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) also fell in the direction of crude oil prices. They fell by 2.7% and 7.7%, respectively, on April 4, 2016. The SPDR S&P 500 ETF (SPY) fell marginally by 0.3% to $206.29.
Oil producers’ meeting
OPEC (Organization of the Petroleum Exporting Countries) members and major oil producers will be meeting on April 17, 2016, in Doha, Qatar, to discuss how a crude oil production freeze will support oil prices. However, OPEC’s crude oil production rose in March 2016. Read How Is OPEC Crude Production Trending ahead of Doha Meeting? to learn more. Meanwhile, Iran’s crude oil exports were 2 MMbpd (million barrels per day). To learn more, read How Iran’s Production Was a Turning Point for Crude Prices in 2016. Russia’s crude oil production hit a 30-year high. To learn more, read Why Russia’s Crude Production Doesn’t Bode Well for Doha Meeting. Also, read Do Current Crude Production Levels Bode Well for Doha Meeting.
Rising crude oil production from Iraq to Russia suggests that oil producers’ meeting is already failing. Secondly, inventors and hedge funds are reacting negatively to it. As a result, Brent and WTI crude oil prices hit monthly lows on April 4, 2016. Read more about the hedge funds in Why Hedge Funds Reduced Bullish Positions for 1st Time in 5 Weeks.
Crude oil price volatility
Oil prices rose almost 40% and hit monthly highs on March 22, 2016. To learn more, read What Are the Key Bullish Drivers of Crude Oil Prices in 2016? and India and China: Bullish Catalysts for the Global Crude Oil Market. However, it fell by 16% since the monthly highs. Oil prices fell due to rising doubts about oil producers’ meeting. Read What Are the Bearish Crude Oil Drivers for Crude Oil Prices? to learn more.
Crude oil price volatility impacts ETFs like the VelocityShares 3x Inverse Crude Oil ETN (DWTI), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the PowerShares DWA Energy Momentum (PXI), and the Guggenheim S&P 500 Equal Weight Energy (RYE).
Read the next part of the series for more on the American Petroleum Institute’s crude oil inventory. In this series, we’ll discuss crude oil producers’ break-even cost, oil producers’ rising debts, oil output guidance, and key support and resistance level for crude oil prices.