Crude oil prices
WTI (West Texas Intermediate) crude oil (USL) (PXI) (SCO) futures contracts for May delivery fell 0.5% and settled at $52.4 per barrel on April 18, 2017. The S&P 500 (SPY) (SPX-INDEX) also fell 0.3% on the same day. Crude oil and natural gas are major parts of the energy sector. The energy sector contributed to ~6.6% of the S&P 500 as of April 14, 2017.
US crude oil prices are near a two-week low due to the following:
- rise in US crude oil rig count to April 2015 high
- estimates of a rise in US shale production in May 2017
- rise in Saudi Arabia’s crude oil production in March 2017
Major oil producers’ deal
However, US crude oil (BNO) (IEZ) (ERY) prices hit a 20-month high on February 23, 2017, due to major producers’ production cut deal. Prices have risen 10.7% in the last 12 months due to the deal. Prices are near one-month high due to the following:
- renewed optimism of a possible extension of major producers’ production cut deal
- fall in US gasoline and distillate inventories in the last few weeks
- start of the summer driving season in the US could boost demand and support oil prices
- supply outage in Libya
- concerns of geopolitical tensions in the Middle East due to Syria
- Russia’s intent to extend major producers’ production cut deal
OPEC’s next meeting will be on May 25, 2017. The meeting will likely be the driving force for oil in the next two months. Moves in crude oil prices impact oil and gas exploration and production companies’ earnings such as Northern Oil & Gas (NOG), Chevron (CVX), ExxonMobil (XOM), and Denbury Resources (DNR).
US crude oil prices fell in post-settlement trade on April 18, 2017, after the release of the API’s (American Petroleum Institute) crude oil inventory report.
Market focuses on US crude oil inventories
The U.S. Energy Information Administration will release its weekly crude oil inventory report on April 19, 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 also discuss US gasoline demand and China’s crude oil imports. Let’s start with US crude oil prices in early morning trade on April 19, 2017.