Crude oil prices
WTI (West Texas Intermediate) crude oil (USO) (UCO) (XLE) futures contracts for May delivery rose 0.1% and closed at $48.31 per barrel on March 17, 2017. Broader markets like the S&P 500 (SPY) (SPX-INDEX) and the Dow Jones Industrial Average fell 0.1% and 0.1%, respectively.
Crude oil prices fell 9.5% in the past month. They’re trading near a four-month low due to the following:
- rise in US crude oil rigs to an 18-month high
- near-record US crude oil inventories
- rise in US crude oil production to February 2016 high
- Russia’s lower compliance to major producers’ production cut deal in February 2017
On March 16, 2017, Saudi Arabia’s energy minister said that OPEC would extend major producers’ production cut deal if it isn’t able to remove surplus oil from the oil market. A Reuters poll suggests that there’s a 60% chance of OPEC extending the deal to 2H17. It’s bullish for oil prices. Higher crude oil prices have a positive impact on oil and gas exploration and production companies’ earnings such as ExxonMobil (XOM), Denbury Resources (DNR), and Cobalt International Energy (CIE).
US crude oil prices and moving averages
Crude oil futures for May delivery are below their 20-day and 50-day moving averages of $50.9 and $52.4 per barrel as of March 20, 2017. However, crude oil futures are above their 200-day moving average of $49.1 per barrel as of March 20, 2017. If US crude oil production and inventories see a rise for the week ending March 17, 2017, it could pressure oil prices to break below the 200-day moving average. We could see an extension of bearish momentum. However, the rise in production cuts from Russia in March 2017 could limit the downside for oil prices.
What’s in this series?
In this series, we’ll look at the energy calendar, US crude oil’s (USL) (XOP) (PXI) highs and lows in the last 12 months, Cushing crude oil inventories, the US crude oil rig count, and some crude oil price forecasts.
Let’s look at the US dollar and how it impacts crude oil prices in the next part of this series.