Bullish forces for crude oil prices
In this part of the series, we’ll look at some more bullish drivers for crude oil prices over the long term.
Bullish catalysts for crude oil prices
- On May 1, South Korea’s Ministry of Trade reported that South Korea’s crude oil imports rose 11.8% year-over-year in April 2016 to 87.6 million barrels. Crude oil imports were at 85.9 million barrels in March 2016. The month-over-month increase in crude oil imports was ~2% for April 2016. Crude oil imports were at 78.4 million barrels in April 2015. The rise in crude oil imports from South Korea supported crude oil prices in April 2016. The expectation for a rise in imports should benefit crude oil prices.
- On May 4, December 2020 WTI (West Texas Intermediate) crude oil futures contracts were trading at $52.32 per barrel. The forward curve suggests higher crude oil prices in the future.
- The IEA (International Energy Agency) expects India to surpass Japan as the third-largest crude oil consumer in 2016. India’s crude oil consumption will increase to 4.2 MMbpd (million barrels per day) in 2016 compared to 4.1 MMbpd for Japan in 2016. The IEA also estimates that India’s crude oil demand growth rate will be the highest by 2040. To learn more, read India’s Crude Oil Demand Will Likely Drive the Crude Oil Market.
- The IEA estimates that crude oil production from non-OPEC (Organization of the Petroleum Exporting Countries) producers could fall in 2016. For more, read Non-OPEC Crude Oil Production Impacts Crude Oil Prices and Will the Crude Oil Supply and Demand Gap Narrow by Early 2017?
Impact on energy stocks and ETFs
The rise in crude oil prices supports oil and gas producers like Ultra Petroleum (UPL), Triangle Petroleum (TPLM), and Northern Oil & Gas (NOG). ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the VelocityShares 3x Long Crude Oil ETN (UWTI), and the Guggenheim S&P 500 Equal Weight Energy ETF (RYE) are also influenced by crude oil prices’ ups and downs.
In the next part of this series, we’ll look at some vital bearish drivers for crude oil prices.