Crude oil prices and US stock exchanges 

April WTI (West Texas Intermediate) crude oil (IXC) (USO) (IYE) prices are at a three-month low as of March 13, 2017. So far, crude oil prices and broader markets such as the S&P 500 (SPY) (SPX-INDEX) are diverging in 2017. The S&P 500 (SPY) rose ~6.3% YTD (year-to-date). However, crude oil prices fell 13.2% YTD. Meanwhile, US crude oil prices rose ~7.5% in the past year. SPY rose ~17.2% during the same period. So, bullish momentum in the US stock market could partially support oil prices. For more on crude oil prices, read Part 1 of this series.

What Investors Can Expect from Crude Oil Prices

Crude oil’s highs in the last 12 months 

US WTI crude oil prices settled at $54.45 per barrel on February 23, 2017—the highest level since June 2015. As of March 10, 2017, crude oil prices were 10.7% below their high.

Key bullish drivers for crude oil in 2017  

Crude oil’s lows in the last 12 months 

US crude oil settled at $26.21 per barrel on February 11, 2016. Crude oil prices hit a 13-year low due to the following factors:

As of March 10, 2017, crude oil prices have risen 85.5% from their 2016 lows. Higher crude oil (FENY) (XLE) (PXI) prices have a positive impact on oil producers’ earnings such as Occidental Petroleum (OXY), QEP Resources (QEP), Warren Resources (WRES), and Synergy Resources (SYRG).

Key bearish drivers for crude oil in 2017 

Crude oil price forecasts  

Crude oil prices could collapse due to the factors mentioned above. Crude oil prices are trading below the 200-day moving averages. BTU Analytics thinks that if OPEC doesn’t extend major oil producers’ production cut deal, we could see oil prices breaking below $40 per barrel in the short term. To learn more, read the last part of the series.

In the next part of the series, we’ll look at how Cushing crude oil inventories impact crude oil prices.

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