Crude oil prices
WTI (West Texas Intermediate) crude oil (USL) (IYE) (BNO) futures contracts for May delivery rose 0.5% and closed at $50.6 per barrel on March 31, 2017. It had the biggest weekly gain in the last four months. Broader markets like the S&P 500 (SPY) (SPX-INDEX) and the Dow Jones Industrial Average fell 0.2% and 0.3%, respectively, on March 31, 2017.
Price are up ~6% in the past week. They’re trading near a one-month high due to:
- possible extension of major producers’ production cut deal in 2H17
- larger-than-expected fall in gasoline and distillate inventories—suggests improving demand due to the beginning of the summer driving season
- supply outage in Libya
Major oil producers’ meeting
Higher compliance among OPEC (Organization of the Petroleum Exporting Countries) producers with major producers’ production cut deal in March 2017 supported oil prices. A Reuters survey showed 95% and 94% compliance in March 2017 and February 2017 with targeted production cuts.
On April 2, 2017, OPEC’s secretary general said that global crude oil inventories are falling. It shows that major producers’ production cut deal is helping the oil market rebalance.
Six OPEC members and Oman expressed interest in extending major producers’ production cut deal in 2H17. The deal is expected to remove surplus oil from the oil market. OPEC’s meeting is scheduled on May 25, 2017. Saudi Arabia, OPEC’s largest producer, said it would extend the deal if global crude oil inventories stayed above the five-year average.
Russia is the largest oil producer in the world. Higher compliance by Russia in the coming months with major producers’ production cut deal could support oil prices. Moves in crude oil prices impact oil and gas exploration and production companies’ earnings such as Chevron (CVX), Stone Energy (SGY), W&T Offshore (WTI), ExxonMobil (XOM), and Denbury Resources (DNR).
What’s in this series?
In this series, we’ll look at the energy calendar, US crude oil’s (USO) (XOP) (UCO) 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.