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.
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:
- OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers could officially declare a crude oil production cut by 1.8 million barrels per day in 2H17.
- Saudi Arabia and Russia are keen to extend the production cut deal for nine more months.
- Iran might support the production cut deal after achieving its production target in 2017.
- Iraq will likely support the production cut deal.
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.
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.