US crude oil
US crude oil (USO) (OIIL) (USL) (SCO) futures contracts for April delivery closed at $54.01 per barrel on February 28, 2017—0.1% less than the previous closing price. Crude oil fell due to concerns about rising US oil production.
While OPEC’s production cuts supported oil prices, concerns about rising US crude oil production weighed on oil prices. In Part 2 of this series, we’ll discuss how oil rigs impact US oil production. In the trailing week, US crude oil active futures fell 0.6%. During the same period, the Energy Select Sector SPDR ETF (XLE) fell 1.5% and the S&P 500 Index (SPY) (QQQ) (SPX-INDEX) was flat. Crude oil is an important driver for energy ETFs. It can also impact broader markets.
On February 28, 2017, the API (American Petroleum Institute) reported a build of ~2.5 MMbbls (million barrels) in crude oil inventories for the week ending February 24, 2017. The EIA (U.S. Energy Information Administration) will provide inventory data for the week ending February 24, 2017, on March 1, 2017.
If the EIA reports an equally large or larger build in crude oil inventories, levels could hit a fresh record, according to data from the EIA going back 35 years to 1982. In such a scenario, oil prices could be dragged down.
Key moving averages
Currently, crude oil futures are trading 2.8% above their 100-day moving average and 0.4% above their 20-day moving average. Prices above the 100-day moving average and 20-day moving average indicate bullish sentiment for crude oil prices.
In this series, we’ll analyze how fundamental drivers like the rig count, crude oil inventories, and the US dollar impact crude oil prices. We’ll also try to understand what the crude oil futures forward curve and Brent-WTI spread might be indicating.
Next, we’ll see how rig counts impact oil prices.