US crude oil
US crude oil (USO) (OIIL) (USL) (DBO) futures contracts for June 2017 delivery closed at $49.07 per barrel on May 17, 2017, 0.8% more than the previous day’s closing price. Between May 10 and May 17, US crude oil June futures gained 3.7%. Bullish sentiment because of OPEC’s (Organization of the Petroleum Exporting Countries) production cuts and EIA inventory data helped crude oil prices rise.
Though oil prices rose on May 17, the Energy Select Sector SPDR ETF (XLE) fell 1.2%, while the S&P 500 (SPY) (IVV) (VNN) (SPX-INDEX) fell 1.7%. Broad equity markets fell as fears over the continuation of the Trump presidency took their toll.
Crude oil is key for global equities. Between May 10 and May 17, the Dow Jones Industrial Average (DJIA-INDEX) (DIA) fell 1.4%, while the S&P Mid Cap 400 (IVOO) (MID-INDEX) fell 2.6%. The FTSE 100 (UKX-INDEX) (EWU) rose 1.6%, and the CAC 40 (PX1-INDEX) (EWQ) fell 1.5%.
On May 17, 2017, the IEA (International Energy Agency) suggested that even if OPEC continued with its production cuts in 2H17, oil stocks could remain above their five-year average, which would be a concern for oil bulls. In the next part of this series, we’ll discuss how oil rigs could impact oil prices. Later, we’ll discuss oil inventories.
On May 16, 2017, the EIA (Energy Information Administration) reported a fall of ~1.8 MMbbls (million barrels) in crude oil inventories for the week ended May 12, 2017. The EIA also reported a fall of ~0.4 MMbbls in gasoline inventories. A fall in inventories could ease concerns about a glut in crude oil and its refined products.
Key moving averages
Crude oil June futures are now trading 6.2% below their 100-day moving average but 1.6% above their 20-day moving average. More importantly, the 50-day moving average is 3.7% below the 200-day moving average after having crossed below it on April 27, 2017, which is a bearish signal for crude oil prices.
US commercial crude oil inventories fell ~1.8 MMbbls (million barrels) during the week ended May 12, 2017, to ~520.8 MMbbls.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.