Crude oil price drivers
Bullish catalysts for crude oil prices
- The API (American Petroleum Institute) estimated that US crude oil inventories fell by 4.3 MMbbls for the week ending April 1, 2016. The fall in US crude oil inventories supports crude oil prices. We’ll discuss this more in the fifth part of this series.
- Crude oil inventories at Cushing, Oklahoma, fell for the second time in the last ten weeks for the week ending March 25, 2016. To learn more, read How Cushing Inventories Could Affect Crude Oil Prices .
- US crude oil production fell by 7% from the peak of 9.7 MMbpd (million barrels per day) to 9.0 MMbpd for the week ending March 25. This is the lowest level since November 14, 2014. The International Energy Agency expects US crude oil production will decline by 530,000 barrels per day in 2016. Read How Long Will US Crude Oil Production Support Crude Oil Prices? to learn more.
- Crude oil supply outages in Iraq and Nigeria increased by 0.25 MMbpd in March 2016 compared with the previous month. To learn more, read Crude Oil Production Outages: Key Driver for Crude Oil Prices.
- On April 5, 2016, Kuwait’s OPEC governor made bullish comments regarding the oil producers’ meeting in Qatar on April 17. To learn more, read the previous part of this series. Anticipation of this meeting has increased oil price volatility in 2016.
Impact on oil stocks and ETFs
All these bullish catalysts will influence crude oil prices in 2016. The recent surge in crude oil prices impacts oil and gas producers like Halcón Resources (HK), SM Energy (SM), Bonanza Creek Energy (BCEI), Sanchez Energy (SN), and Goodrich Petroleum (GDP). The roller-coaster ride in oil and gas prices also affects ETFs and ETNs like the United States Oil Fund (USO), the United States Brent Oil Fund (BNO), the DB Crude Oil Double Short ETN (DTO), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the Direxion Daily Energy Bear 3x ETF (ERY), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
Read the next part of this series to learn more about bullish drivers for crude oil prices.