1 Jun

Libya and OPEC Pressure Crude Oil Prices to a 3-Week Low

WRITTEN BY Gordon Kristopher

Crude oil prices  

July WTI (West Texas Intermediate) crude oil (USO) (UCO) (XES) futures contracts trading in NYMEX fell 2.7% and closed at $48.32 per barrel on May 31, 2017. Brent crude oil futures fell 2.9% and closed at $50.31 per barrel on the same day. The S&P 500 (SPY) (SPX-INDEX) and NASDAQ fell 0.05% and 0.08%, respectively, on May 31, 2017.

Crude oil prices are at a three-week low due to the following:

  • Libya’s crude oil production rose above a three-year high in May 2017.
  • OPEC’s crude oil production rose in May 2015—the first production rise in 2017.
  • US gasoline demand fell in the first three months of 2017—compared to the first three months in 2016.

Libya and OPEC Pressure Crude Oil Prices to a 3-Week Low

National Oil Corporation of Libya estimates that Libya’s crude oil output rose to 827,000 bpd (barrels per day) in May 2017. It’s above the three-year peak of 800,000 bpd hit in early May 2017.

For more bearish drivers, read Crude Oil Prices Fell and Dragged S&P 500 Down. Crude oil prices fell ~6% after OPEC’s meeting. Lower oil prices have a negative impact on oil and gas producers’ earnings. Some US oil and gas exploration and production companies like Chesapeake Energy (CHK), Comstock Resources (CRK), and Whiting Petroleum (WLL) fell 10.8%, 19.7%, and 20.5%, respectively, after OPEC’s meeting.

Market focuses on US crude oil inventories 

The EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report on June 1, 2017, at 11:00 AM EST. We’ll look at the American Petroleum Institute’s estimates for US crude oil and gasoline inventories in Part 3 of this series.

Let’s start with US crude oil prices in early morning trade on June 1, 2017. We’ll also discuss OPEC’s crude oil production in May 2017.

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