Crude oil prices
The November WTI (West Texas Intermediate) crude oil futures contracts rose 5.3% and closed at $47.05 per barrel on September 28, 2016. Brent crude oil futures rose 5.9% and settled at $48.69 per barrel.
Prices rose as OPEC (Organization of the Petroleum Exporting Countries) producers were reported to have reached an agreement to cap production in the November meeting. ETFs like the United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose 4.9% and 9.4%, respectively, on September 28, 2016.
Oil producers meeting
On September 28, 2016, OPEC members hinted at a reduction in crude oil production by around 1 MMbpd (million barrels per day) to 32.5 MMbpd in OPEC’s November policy meeting. This is the first time that OPEC agreed to reduce production in the last eight years. Read How Will OPEC’s Rising Production Impact Oil Prices? for more on OPEC’s production. Oil prices crashed in the last two years due to oversupply. For more on US crude oil prices’ highs and lows, read US Crude Oil Prices Fell Due to Profit-Booking.
OPEC didn’t cap its production at its meeting on June 2. The failure of the Doha meeting on April 17 put a lid on crude oil prices. Read Hopes for Oil Producer Meeting Boosted Prices for Last 2 Months and Why Did the Doha Oil Producer Meeting Fail? to learn more.
Many traders and banks are still skeptical about the implementation of the quota system for OPEC members. However, Goldman Sachs estimates that OPEC’s historic deal could push crude oil prices higher by $10 per barrel from the current levels.
Volatility in crude oil prices impacts oil and gas producers’ earnings like Comstock Resources (CRK), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM).
It also impacts funds such as the iShares Global Energy ETF (IXC), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the Direxion Daily Energy Bear 3x ETF (ERY), and the United States Brent Oil ETF (BNO).
US crude oil inventories
The U.S. Energy Information Administration released its weekly crude oil inventory report on September 28, 2016. We’ll look at US crude oil inventories and their regional breakdown in Part 3 of this series.
In this series, we’ll look at US crude oil production, refinery demand, imports, and US gasoline and distillate prices and inventories.
We’ll start by looking at US crude oil prices in early morning trade on September 29, 2016.
The EIA released its weekly crude oil inventory report on September 28, 2016. US crude oil inventories are near January 2016 levels.
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As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
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