Crude oil prices fell
US benchmark WTI (West Texas Intermediate) crude oil futures contracts for May delivery fell by 1.4% and closed at $39.78 per barrel on April 18, 2016. Global benchmark Brent crude oil futures also fell slightly by 0.4% to $42.9 per barrel. Prices fell due to the failure of oil producers’ meeting in Doha. The United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) fell by 0.8% and 1.1%, respectively, on the same day. In contrast, the SPDR S&P 500 ETF (SPY) rose by 1.5% and settled at $209.25 on April 18, 2016.
Oil producers’ meeting
The oversupplied crude oil market and failure of oil producers’ meeting weighed on crude oil prices. Crude oil prices fell for the fourth consecutive day. The major oil producers’ meeting took place on April 17, 2016. The meeting ended with no agreement about freezing the crude oil production at January 2016 levels. Read Hopes for Oil Producer Meeting Boosted Prices for Last 2 Months and Why Did the Doha Oil Producer Meeting Fail? to learn more.
Oil workers’ strike in Kuwait led to a massive decline in oil production. Kuwait’s crude oil production fell to 1.1 MMbpd (million barrels per day)—compared to 2.8 MMbpd during the normal days. The supply outage limited the downside of crude oil prices. The supply disruption could be short-lived. Government officials are in negotiations with oil workers to compromise in order to increase oil exports.
Depreciating dollar and global equities
The depreciating US Dollar Index also limited the downside for crude oil prices. The depreciating US dollar makes crude oil cheaper for oil importing economies. Secondly, the steady rise in global equity markets also supported crude oil prices.
This series focuses on the American Petroleum Institute’s crude oil stocks, non-Organization of the Petroleum Exporting Countries supplies, India’s crude oil demand, the crude oil supply and demand gap, and the crude oil price forecast.