Crude oil futures
US crude oil (XLE) (VDE) (BNO) futures contracts for August delivery fell 1.1% and settled at $46.02 per barrel on July 17, 2017. Brent crude oil futures also fell 1% to $48.42 per barrel on the same day. Prices fell due to the following:
- There was a rise in global crude oil production by 720,000 bpd (barrels per day) to 97.46 (million barrels per day) in June 2017.
- So far, Libya’s crude oil production is at 1.03 MMbpd in July 2017. High production from Libya in 2017 could weigh on crude oil prices.
- US crude oil rigs have risen 142% from the lows in May 2016.
- US crude oil production is near a two-year high.
Crude oil prices have fallen 19.1% year-to-date. Lower crude oil prices have a negative impact on oil producers like Sanchez Energy (SN), Apache (APA), Noble Energy (NBL), and Goodrich Petroleum (GDP).
EIA’s monthly drilling report
The EIA (U.S. Energy Information Administration) released its monthly drilling productivity report on July 17, 2017. It reported that US crude oil production would rise in the seven shale regions by 113,000 bpd to 5,585,000 bpd in August 2017—compared to July 2017. Production is expected to rise for the eighth consecutive month. Production is expected to rise mainly in the Permian, Eagle Ford, and Niobrara shale regions during this period. Production would also pressure crude oil prices.
The S&P 500 Index (SPY) (SPX-INDEX) fell 0.1% to 2,459.14 on July 17, 2017. The S&P 500 hit 2,463.5 on July 14, 2017—its highest level ever. Bullish momentum in SPY could support energy demand and the energy sector. For more on the bullish drivers, read SPY, China, and US Inventories Moved Crude Oil Futures Last Week.
In this series, we’ll discuss crude oil drivers in more detail.