Crude oil holds above $50
After breaking the resistance level of $50 and reaching multi-month high price levels on October 6, crude oil prices held their position above $50 in the early hours on October 7. At 6:20 AM EST on October 7, the West Texas Intermediate crude oil futures contract for November delivery was trading at $50.26 per barrel—a fall of ~0.4%. The Brent crude futures contract for December delivery was trading at $52.19 per barrel—a fall of ~0.69%.
Improved sentiment supports crude oil prices
The sentiment in the crude oil market has been positive due to the outcome of producers’ meeting last week and the fall in crude oil inventories. In producers’ meeting last week, OPEC (Organization of the Petroleum Exporting Countries) announced an output cut for all its members to 32.5 MMbpd–33 MMbpd (million barrels per day). The current output stands at 33.5 MMbpd. Individual members’ output limit will be announced at its next meeting at the end of November. On October 6, Algeria’s energy minister, Noureddine Bouterfa, said that OPEC could cut more output from its members if necessary.
For the week ending on September 30, the American Petroleum Institute reported a drawn-down in inventories by 7.6 MMbbls (million barrels). The U.S. Energy Information Administration reported a fall of 2.98 MMbbls. As of the latest report, the crude oil inventory levels are at 499.7 MMbbls—the lowest inventory levels since January 2016. The fall in inventory levels supported crude oil prices this week.
On October 6, major crude oil producers Carrizo Oil & Gas (CRZO), Canadian Natural Resources (CNQ), Total SA (TOT), and British Petroleum (BP) fell 0.12%, 0.71%, 0.27%, and 0.25%, respectively. The SPDR S&P Oil & Gas Exploration and Production ETF (XOP) fell 0.26%, while the PowerShares DB Oil ETF (DBO) rose 1.4%.