20 Jun

Crude Oil Prices Trade at a 7-Month Low

WRITTEN BY Gordon Kristopher

Crude oil prices 

July West Texas Intermediate crude oil (USO) (XLE) (VDE) futures contracts trading in NYMEX fell 1.2% and settled at $44.2 per barrel on June 19, 2017. Brent crude oil futures trading in ICE fell 1% and closed at $46.9 per barrel on June 19, 2017. It’s the lowest settlement for Brent crude oil futures since November 29, 2016, which was prior to OPEC’s meeting in November 2016.

Crude Oil Prices Trade at a 7-Month Low

US crude oil (RYE) (BNO) prices have fallen 21.97% year-to-date. Prices fell due to the following:

  • An expectation that a rise in production from the US, Brazil, Canada, Libya, and Nigeria would offset the production cut efforts from OPEC and Russia in 2H17.
  • A rise was expected in US gasoline and distillate inventories last week.
  • The US crude oil rig count rose 121.7% or by 410 rigs year-over-year. Market surveys project that it could lead to a rise in US crude oil production in 4Q17.
  • Japan’s crude oil imports fell 13.5% in May 2017—compared to May 2016.
  • India crude oil imports fell 4.2% in May 2017—compared to May 2016.

For more on bearish drivers, read Traders Track the Key Support Level for Crude Oil Futures. Lower crude prices have a negative impact on companies like Chevron (CVX), Northern Oil & Gas (NOG), and QEP Resources (QEP). However, crude oil prices could rise due to the following: 

  • US crude oil inventories were expected to fall on June 9–16, 2017.
  • Saudi Arabia’s crude oil exports to the US and Asia were expected to fall.
  • The S&P 500 (SPY) (SPX-INDEX) rose 0.8% and closed 2,453.5 on June 19, 2017—the highest level ever. Bullish momentum in SPY could support crude oil prices. 

In the next part of the series, we’ll look at crude oil stored in tankers and its impact on oil prices.

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