Crude oil prices
December WTI (West Texas Intermediate) crude oil futures contracts rose 5.7% and settled at $45.81 per barrel on November 15, 2016. It’s the highest one-day gain in seven months. Brent crude oil futures also rose 5.7% and closed at $46.95 per barrel.
Crude oil prices rose due to renewed hopes of OPEC (Organization of the Petroleum Exporting Countries) stabilizing the crude oil market with its plan to cap production.
OPEC’s meeting will be held on November 30 in Vienna. The tussle for market share among OPEC members increased pessimism around OPEC’s plan to cap productionplan to cap production. Saudi Arabia wanted to cap production. However, countries like Iran, Iraq, Libya, and Nigeria wanted to increase crude oil production. Oversupply concerns pressured crude oil prices to nearly a two-month low on November 11, 2016.
Qatar, Algeria, and Venezuela are working together ahead of OPEC’s meeting to cement OPEC’s historic deal. OPEC’s secretary general said that he would meet with countries like Iran and Venezuela ahead of OPEC’s meeting. Saudi Arabia’s energy minister will meet with countries like Russia for possible details on implementing the plan to cap productionplan to cap production this week.
US crude oil inventories
OPEC’s renewed hopes to cap production led to short covering. Crude oil prices rose on November 15, 2016. However, expectations of a bearish crude oil inventory report could pressure crude oil prices. The U.S. Energy Information Administration will release its weekly crude oil inventory report on November 16, 2016. We’ll look at US crude oil and gasoline inventories in Part 2 and Part 3 of this series.
US dollar and crude oil
The US Dollar Index rose 0.2% to 100.2 on November 15, 2016—its highest level since early 2016. A stronger US dollar will pressure crude oil prices. For more, read Trump and the US Dollar Could Pressure Crude Oil Prices.
Impact on stocks and ETFs
The rollercoaster ride in crude oil prices can impact oil and gas exploration and production companies’ earnings such as ExxonMobil (XOM), Carrizo Oil & Gas (CRZO), Denbury Resources (DNR), Chevron (CVX), Marathon Oil (MRO), and Triangle Petroleum (TPLM).
The ups and downs in crude oil prices impact ETFs and ETNs such as the Direxion Daily Energy Bear 3x ETF (ERY), the Fidelity MSCI Energy ETF (FENY), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the Direxion Daily Energy Bear 3x (ERY), and the United States Brent Oil ETF (BNO).
What’s in this series?
In this series, we’ll discuss the American Petroleum Institute’s crude oil and gasoline inventories, monthly US crude oil production, OPEC’s monthly crude oil production, Iran’s crude oil production, the CFTC’s “Commitments of Traders” report, and crude oil’s contango market.
Let’s start with US crude oil prices during early morning trade on November 16, 2016.