22 May

What Crude Oil Traders Expect from OPEC’s Meeting on May 25

WRITTEN BY Gordon Kristopher

Crude oil prices 

June WTI (West Texas Intermediate) crude oil (VDE) (XLE) (RYE) futures contracts rose 2% and settled at $50.33 per barrel on May 19, 2017. Brent crude oil futures contracts rose 2.1% and settled at $53.6 per barrel on the same day. The S&P 500 (SPY) (SPX-INDEX) rose 0.7% to 2,381.7 on May 19, 2017.

What Crude Oil Traders Expect from OPEC’s Meeting on May 25

Major oil producers’ deal  

Brent and US crude oil prices rose more than 5% in the week ending May 19, 2017, due to the expectation of an extension of major producers’ production cut deal.

OPEC’s meeting is scheduled for May 25, 2017. Key takeaways for crude oil traders and investors are mentioned below:

The purpose of the deal is to remove surplus oil from the market. However, high global and US crude oil inventories and high US crude oil production could pressure oil prices. Oil prices are down ~10% year-to-date. Lower crude oil (USO) (UCO) prices have a negative impact on oil and gas exploration and production companies’ earnings like ExxonMobil (XOM), Sanchez Energy (SN), and Goodrich Petroleum (GDP).

Meanwhile, Libya, Nigeria, and Brazil are scaling up production. The rise in production from these countries could delay rebalancing in the oil market.  

Series focus 

In this series, we’ll look at the energy calendar, US crude oil’s highs and lows in the last 15 months, Cushing crude oil inventories, the US crude oil rig count, and some crude oil price forecasts.

In the next part, we’ll look at the US dollar and how it impacts crude oil prices.

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