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What Are the Key Drivers for the Crude Oil Market This Week?

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Crude oil prices  

July West Texas Intermediate crude oil futures contracts trading in NYMEX rose by 2.9% and settled at $49.37 per barrel on June 20, 2016. Brent crude oil futures trading in ICE also rose 3% and closed at $50.65 per barrel. Prices rose for the second day due to the rise in gasoline demand and the lower chance of the United Kingdom leaving the European Union. ETFs like the United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil (UCO) rose 2.1% and 4.1%, respectively, on June 20, 2016.

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Gasoline demand 

Gasoline futures rose almost 5% on Monday, June 20, 2016. Prices rose due to the expectation of a rise in gasoline demand during the summer. Gasoline prices also rose ahead of the long weekend for Independence Day on July 4, 2016. Summer driving usually peaks during this period in the US. The rise in gasoline demand will lead to the rise in crude oil demand. High gasoline and crude oil prices benefit refiners and oil producers like Cobalt International Energy (CIE), Tesoro (TSO), Valero Energy (VLO), and Northern Oil & Gas (NOG).

United Kingdom

The uncertainty of the United Kingdom exiting the European Union could cause economic turmoil. It could also hamper crude oil demand sentiments. However, the latest polls suggest that it might not exit the European Union. This positive sentiment boosted crude oil prices.

Meanwhile, the depreciating US dollar also supported crude oil prices during trade on June 20, 2016. 

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Key catalysts for the crude oil market this week

Tuesday, June 21, 2016 

  • API’s (American Petroleum Institute) crude oil inventory report

Wednesday, June 22, 2016

  • EIA’s (U.S. Energy Information Administration) Petroleum Status report
  • EIA’s “This Week in Petroleum” report

Thursday, June 23, 2016

  • EIA’s weekly natural gas storage report—check out last week’s report at How Natural Gas Inventories Impact Natural Gas Prices
  • EIA’s natural gas weekly update

Friday, June 24, 2016

  • Baker Hughes’s US crude oil rig count
  • Baker Hughes’s US natural gas rig count 

High Brent and WTI crude oil prices 

These catalysts drive crude oil prices. So, traders track these drivers closely. Brent crude oil prices hit $52.51 on June 8—the highest settlement since early October 2015. US crude oil tested $51.53 on June 8—its highest level since July 2015. Meanwhile, July WTI crude oil futures contracts were trading at $49.03 per barrel in electronic trade at 2 AM EST on June 21, 2016. Crude oil production resumed in Canada after the wildfires. This could limit the upside for crude oil prices. The rollercoaster ride in oil prices impacts ETFs and ETNs such as the iShares US Oil Equipment & Services (IEZ), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), and the ProShares UltraShort Bloomberg Crude Oil (SCO).

Series focus  

This series focuses on the API’s crude oil inventory report, Cushing crude oil inventories, US crude oil rig count, US crude oil production, the U.S. Commodity Futures Trading Commission’s “Commitments of Traders” report, and the crude oil price forecast.

In the next part of this series, we’ll discuss the API’s crude oil inventories and how they impact crude oil prices.

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