Crude oil price catalysts
Bullish drivers for crude oil prices
- US crude oil production fell by 15,000 bpd (barrels per day) to 8.95 MMbpd (million barrels per day) for the week ending April 22 from the previous week. This is the lowest level since October 17, 2014. For the latest on US crude oil production, read How Did US Crude Oil Production Support Crude Oil Prices?
- Gasoline demand is expected to rise during the summer driving season by 1.4% year-over-year to record levels in 2016. The four-week average gasoline demand rose by 18,000 bpd to 9.4 MMbpd for the same period. It’s 6% more than the corresponding period in 2015. The U.S. Department of Transportation reported that US drivers drove 232.2 billion vehicle miles in February 2016. This is 5.6% more than the corresponding period in 2015. Lower gasoline prices have motivated drivers to buy more sport utility vehicles and trucks, which consume more gasoline than other vehicles. The improvement in the labor market also motivated drivers to buy more vehicles. Mild weather also encouraged US drivers to drive more in early 2016. Expectations of a rise in gasoline demand should support gasoline and crude oil prices. For more on gasoline inventories, see the final part of this series.
- The US dollar depreciated to lows of January 2015. It’s depreciated ~6% since highs of January 2016. The dollar supported crude oil prices in April 2016. Read the previous part of this series to learn more.
- The three-day oil worker strike in Kuwait brought crude oil production down from 2.8 MMbpd to 1.1 MMbpd on April 20. It also supported crude oil prices. For more on these drivers, read Crude Prices Rose Due to Supply Outage in Kuwait: What’s Next?
Impact on upstream oil companies and ETFs
High crude oil prices benefit upstream oil players like Energy XXI (EXXI), Bonanza Creek Energy (BCEI), and Carrizo Oil & Gas (CRZO). Crude oil prices also affect ETFs and ETNs like the United States Brent Oil ETF (BNO), the ProShares Ultra Oil & Gas (DIG), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
Read the next part of this series to learn more about bullish catalysts for crude oil prices over the long term.