Brent and US Crude Oil Prices Diverge despite US Election

Where are crude oil prices headed?

December WTI (West Texas Intermediate) crude oil futures contracts rose 0.2% and closed at $44.98 per barrel on November 8, 2016. In contrast, Brent crude oil futures fell 0.2% and settled at $46.04 per barrel.

Brent and US Crude Oil Prices Diverge despite US Election

US crude oil prices rose due to expectations of a Clinton win. Read US Election: How Will It Impact the Stock and Energy Markets? for more information. However, Pessimism around OPEC’s (Organization of the Petroleum Exporting Countries) plan to cap production pressured Brent crude oil prices. Likewise, WTI crude oil prices could come under pressure due to expectations of a bearish weekly US crude oil inventory report.

OPEC meeting 

The secretary-general of OPEC said that OPEC members should reach an agreement on the details of capping production on November 30, 2016, in Vienna, Austria. If they fail, crude oil prices will likely see pressure in the short term. For more information, read Will OPEC Successfully Implement Its Production Cap Plans? For more on OPEC, read Market Moves Focus to OPEC Meeting in November and The OPEC-Russia Meeting: Bullish or Bearish for Crude Oil Market?

Lower crude oil prices could have a negative impact on the earnings of oil and gas producers such as Cobalt International Energy (CIE), Chevron (CVX), PDC Energy (PDCE), and QEP Resources (QEP).

Volatility in crude oil prices can affect ETFs such as the Energy Select Sector SPDR ETF (XLE), the iShares Global Energy (IXC), the Direxion Daily Energy Bear 3x ETF (ERY), the United States 12 Month Oil ETF (USL), and the PowerShares DWA Energy Momentum ETF (PXI).

Brent and US Crude Oil Prices Diverge despite US Election

The market focuses on the US crude oil inventory report 

On November 9, 2016, the EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report for the week ended November 4, 2016. The American Petroleum Institute released its weekly crude oil inventory report on November 8, 2016. For more on these inventory reports, read Part Three and Part Four of this series. For more on the weekly energy calendar, read Energy Calendar for Crude Oil and Natural Gas.

Series focus 

In this series, we’ll capture the impact of the US election’s results on the performances of energy stocks. In the next article, let’s look at crude oil prices during early morning trading on November 9, 2016, and a US election results update.