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US Dollar and Oversupply Concerns Pressure Crude Oil Prices

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Dec. 4 2020, Updated 10:42 a.m. ET

Crude oil prices 

March WTI (West Texas Intermediate) crude oil (ERX) (IEZ) (USO) (PXI) futures contracts fell 1.6% and settled at $52.17 per barrel on February 7, 2017. However, the US stock market (SPY) rose 0.02% on February 7, 2017. Oil and gas are the major components of the energy sector. The energy sector contributed to ~7.3% of the S&P 500 (SPY) in January 2017.

Crude oil pricestwo-week low fell for the second consecutive day to a Crude oil pricestwo-week low due to the following factors:

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  • The US dollar (UUP) rose ~0.4% to 100.25 on February 7, 2017. It pressured oil prices. The US dollar is recovering from almost a two-month low.
  • There were expectations of a rise in US crude oil inventories.
  • The EIA (U.S. Energy Information Administration) expects US crude oil production to rise to a 48-year high in 2018. For more, read the last part of the series.

Lower crude oil (XLE) (XOP) (UCO) (FENY) prices have a negative impact on oil and gas exploration and production companies’ earnings such as Marathon Oil (MRO), Warren Resources (WRES), Chevron (CVX), and QEP Resources (QEP).

Crude oil prices also fell on February 7, 2017, due to the API’s (American Petroleum Institute) bearish crude oil inventory report. However, traders are confident that higher compliance among OPEC (Organization of the Petroleum Exporting Countries) members to reduce the output could curb oversupply in the market. To learn more, read the Part 6 of this series.

Market focuses on US crude oil inventories 

The EIA will release its weekly crude oil inventory report on February 8, 2017, at 10:30 AM EST. We’ll look at the API’s estimates for US crude oil and gasoline inventories in Part 2 and Part 3 of this series.

In this series, we’ll discuss gasoline demand as well as China’s oil imports and demand.

Let’s start with US crude oil prices in early morning trade on February 8, 2017.

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