Saudi Arabia and US Inventories Pressure Crude Oil Prices



Crude oil prices 

April WTI (West Texas Intermediate) crude oil (XLE) (XOP) (PXI) futures contracts fell 1.4% and settled at $47.72 per barrel on March 14, 2017. The US stock market (SPY) (SPX-INDEX) also fell 0.3% on March 14, 2017. Oil and gas are major parts of the energy sector. The energy sector contributed to ~6.5% of the S&P 500 as of March 10, 2017.

US crude oil prices fell ~10% in the last five sessions due to the following factors:

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  • There was a rise in Saudi Arabia’s crude oil production in February 2017—read Part 6 to learn more.
  • OPEC’s Monthly Oil Market Report estimates that OECD crude oil inventories rose to 278 MMbbls (million barrels) in January 2017, which is above the five-year average.
  • The US dollar (UUP) rose on March 14, 2017—read Part 2 to learn more.
  • US crude oil inventories are expected to rise to a new record from March 3–10, 2017.
  • The EIA (U.S. Energy Information Administration) estimates that US shale oil production would rise in the seven shale regions to 4.96 MMbpd (million barrels per day) in April 2017. It would be the highest level since March 2016.
  • Cushing crude oil inventories are expected to rise by 1.3 MMbbls from March 3–10, 2017.

Crude oil prices and moving averages 

Crude oil (XES) (IEZ) (USO) prices hit a 20-month high on February 23, 2014, due to major producers’ production cut deal. However, prices are 14% below their peak. They’re also below their 20-day, 50-day, 100-day, and 200-day moving averages. To learn more, read Crude Oil Prices Fell below the 200-Day Moving Average.

However, US crude oil prices rose in post-settlement trade on March 14, 2017, due to the API’s (American Petroleum Institute) bullish crude oil inventory report.

The rollercoaster ride in crude oil prices impacts oil and gas exploration and production companies’ earnings such as Noble Energy (NBL), Chevron (CVX), QEP Resources (QEP), and Synergy Resources (SYRG).

Market focuses on US crude oil inventories 

The EIA will release its weekly crude oil inventory report on March 15, 2017, at 10:30 AM EST. We’ll look at the API’s estimates for US crude oil and gasoline inventories in Part 3 and Part 4 of this series.

In this series, we’ll discuss the US dollar and gasoline demand. We’ll also discuss Saudi Arabia’s crude oil production and how it impacts oil prices. Let’s start with US crude oil prices in early morning trade on March 15, 2017.


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