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Crude Oil Investors Should Track Libya and US Drilling Activity

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Crude oil prices 

WTI (West Texas Intermediate) crude oil (BNO) (USL) (IYE) futures contracts for May delivery fell 0.8% and closed at $48.9 per barrel on March 20, 2017. Crude oil prices are near a four-month low. Crude oil and natural gas are major parts of the energy sector. The energy sector contributed to ~6.5% of the S&P 500 (SPY) (SPX-INDEX) as of March 17, 2017. Broader markets like the S&P 500 and Dow Jones fell 0.2% and 0.04%, respectively, on March 20, 2017.

US crude oil prices fell due to the following:

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  • The US crude oil rig count hit an 18-month high, which could increase US crude oil production. The rise in production will have a negative impact on oil prices.
  • The US dollar rose 0.1% to 100.23 on March 20, 2017.
  • The Es Sider and Ras Lanuf ports restarted in Libya. They’re the largest ports in Libya. They had been closed due to militant attacks.

Crude oil prices fell ~10% in the past month. Read Is It the Beginning of a Bear Market for Crude Oil? for more bearish drivers. Hedge funds also reduced their net long position in WTI crude oil contracts for the third consecutive week.

However, speculation of a possible extension of major producers’ production cut deal could remove surplus oil from the oil market in 2H17. It would cause the supply and demand gap to narrow. The expectation of improving global oil demand could support oil prices.

In this series, we’ll discuss what drives crude oil (XOP) (XLE) (RYE) prices. Volatility in crude oil prices impacts oil producers such as ExxonMobil (XOM), Warren Resources (WRES), Chevron (CVX), and QEP Resources (QEP).

What’s in this series? 

In this series, we’ll focus on the American Petroleum Institute’s crude oil inventories, Iran’s crude oil production, Iraq’s crude oil production, and OECD’s crude oil inventories.

In the next part of this series, let’s start with crude oil prices during early morning trade on March 21, 2017.

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