Crude oil market
US and Brent crude oil (BNO) (PXI) (ERY) (ERX) (IXC) (USL) (USO) (UCO) prices have been on a rollercoaster ride in 2016. WTI (West Texas Intermediate) was trading at $53 per barrel in electronic trade at 2:20 AM EST on December 27, 2016. The Brent crude oil futures contracts was trading at $55.1 per barrel for the same period.
WTI and Brent crude oil have gained ~100% since the lows in February 2016. The huge rally in crude oil prices isn’t unusual. It happened multiple times in the past.
Crude oil’s lows in 2016
US crude oil settled at $26.21 per barrel on February 11, 2016—the lowest level since 2003. As of December 23, 2016, crude oil prices rose 102.2% from their 2016 lows.
Higher crude oil and natural gas prices have a positive impact on producers’ earnings such as ConocoPhillips (COP), Stone Energy (SGY), Occidental Petroleum (OXY), Denbury Resources (DNR), PDC Energy (PDCE), Chesapeake Energy (CHK), Concho Resources (CXO), ExxonMobil (XOM), and Chevron (CVX).
Moves in crude oil and natural gas prices also impact funds such as the Fidelity MSCI Energy ETF (FENY), the DB Crude Oil Double Short ETN (DTO), the ProShares UltraShort Bloomberg Crude Oil (SCO), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the Energy Select Sector SPDR ETF (XLE).
Read Iraq’s Crude Oil Production Is Important for OPEC and Will Trump Impact Iran’s Crude Oil Production? to learn more about crude oil’s bearish drivers.
Crude oil’s highs in 2016
US crude oil prices settled at $53 per barrel on December 23, 2016—the highest since July 14, 2015. Bullish drivers of crude oil prices are mentioned below
- OPEC reached an agreement to cut production by 2 MMbpd (million barrels per day) on November 30, 2016.
- Non-OPEC producers reached an agreement to cut production by 6 MMbpd (million barrels per day) on December 10, 2016.
Read How Will OPEC’s Production Cut Impact Crude Oil Prices, China’s Crude Oil Imports and Demand Impact Crude Oil Prices and Gasoline Demand: Is It Bullish or Bearish for Crude Oil? to learn more about crude oil’s bullish drivers.
Why investors should read this series
If you’re a crude oil investor and want to know the key factors that are impacting oil prices in the short term and long term, this series will help you achieve that purpose.
The indicators discussed in this series are helpful for investors who want to determine whether or not the industry’s fundamental outlook is favorable. By the end of the series, investors will be able to use these indicators to gauge crude oil price movements in the short term and long term.