US crude oil futures
July US crude oil (RYE) (VDE) (XLE) futures contracts fell 3.7% and closed at $44.73 per barrel on June 14, 2017. Brent crude oil futures also fell 3.5% and settled at $47 per barrel on the same day. Prices fell due to the following:
- There was unexpected large build in US gasoline inventories last week.
- The IEA (International Energy Agency) expects supply to surpass demand in 2018.
- US crude oil production rose last week.
- There was a massive fall in US gasoline futures.
- Gasoline demand fell last week.
- OPEC’s crude oil production rose in May 2017.
US crude oil futures broke below the key support level of $45 per barrel on June 14, 2017. The next key support levels are $43.24 and $41.61 per barrel. Prices could test these levels unless any bullish drivers support oil prices.
Bullish triggers are mentioned below:
- There’s an expectation of a fall in OPEC and Russia’s crude oil production in June 2017 due to the production cut deal.
- There could be a supply outage in Nigeria or Libya.
- A near-record S&P 500 (SPY) (SPX-INDEX) could drive the US energy sector. SPY hit an intraday high of 2,445.7 on June 9, 2017—the highest level ever.
- The Fed increased US interest rates by 25 basis points on June 14, 2015. Meanwhile, a seven-month low US dollar (UUP) could support oil prices.
Read Will Crude Oil Prices Break the 10-Month Trading Range? for more on bullish and bearish drivers.
Crude oil prices are at the lowest level since November 2016. US crude oil futures have fallen 21.2% year-to-date. Lower crude oil prices have a negative impact on oil producers like Denbury Resources (DNR), Carrizo Oil & Gas (CRZO), and Chevron (CVX).
In the next part, we’ll look at US crude oil inventories.