What’s Driving Crude Oil Prices above $50 per Barrel?

Crude oil prices  

July WTI (West Texas Intermediate) crude oil futures contracts rose by 1.7% and closed at $51.23 per barrel on June 8, 2016. Brent crude oil futures also rose by 2% and closed at $52.51 per barrel. Crude oil prices rose due to the decline in US crude oil inventories and wildfires in Canada threatening oil output again. The United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil (UCO) rose 1.7% and 3.4%, respectively, on June 8.

What’s Driving Crude Oil Prices above $50 per Barrel?

Canadian wildfires

Wildfires in western Canada hampered production for the second time in the last five weeks. Canadian Natural Resources and Cenovus Energy have oil facilities in the Canadian oil sands regions. They shut down operations and evacuated workers from the Pelican Lake facilities in northern Alberta due to wildfires. Cenovus produces 23,000 bpd (barrel per day) and Canadian Natural produces 47,600 bpd in the Pelican Lake project. However, Canadian Natural Resources shut down 800 bpd in the Pelican Lake project.

Rain forecasts could keep the wildfires from getting bigger. A firefighting official from Alberta said that the fire is under control. The EIA (U.S. Energy Information Administration) estimates that disruptions to oil production averaged about 0.8 MMbpd (million barrels per day) in May 2016 with a daily peak of more than 1.1 MMbpd. It added that disruptions could average 400,000 bpd in June 2016. For more on the Canadian wildfires, read US Crude Oil Inventory, Canadian Wildfires Affected Crude Prices. Read Why Is Nigeria Overshadowing the Crude Oil Market? to learn about the supply disruption caused by Nigeria.

US crude oil inventories 

On June 8, 2016, the EIA released the crude oil inventory report. Read the next part of the series to learn more. Crude oil prices are trading at 2016 highs. Read What Are the Bullish Drivers for Crude Oil Prices? and How Do China and India Impacted Crude Oil Prices? to learn more. High crude oil prices support oil and gas exploration and production companies like WPX Energy (WPX), Swift Energy (SFY), and Sanchez Energy (SN). The roller coaster ride in crude oil prices impacts ETFs and ETNs such as the ProShares UltraShort Bloomberg Crude Oil (SCO) and the United States Brent Oil ETF (BNO).

What’s in this series? 

In this series, we’ll cover US crude oil production and imports, refinery demand, and US gasoline and distillate prices and inventories. Let’s start by looking at US crude oil inventories in the next part of the series.