SPY, China, and US Inventories Moved Crude Oil Futures Last Week



US crude oil futures  

August WTI (West Texas Intermediate) crude oil (XLE) (XOP) (USO) futures contracts rose 1% and closed at $46.54 per barrel on July 14, 2017. Brent crude oil futures rose 1.0% and settled at $48.91 per barrel on the same day.

WTI and Brent crude oil futures rose 5.2% and 4.7% last week. Prices rose due to the following:

  • US crude oil inventories had the largest fall since September 2016.
  • Chinese crude oil imports improved. China’s crude oil imports were 13.8% higher in 1H17—compared to the same period in 2016.
  • The IEA (International Energy Agency) expects that Chinese crude oil imports will increase in 2017. The IEA also expects that US crude oil inventories will fall in 2017.
  • Kuwait’s OPEC governor said that OECD crude oil inventories would fall in 2H17 due to a rise in global crude oil demand and OPEC’s high compliance to the production cut deal.
  • The S&P 500 Index (SPY) (SPX-INDEX) rose 0.5% to 2,459 on July 14, 2017—the highest level ever.

Moves in crude oil prices impact on oil and gas producers like Stone Energy (SGY), Northern Oil & Gas (NOG), and Bill Barrett (BBG). Read Supply, Demand: Will Crude Oil Futures Rally Be Short-Lived? for more on crude oil price drivers.

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Global crude oil demand 

The IEA estimated that global crude oil demand fell by 1 MMbpd (million barrels per day) to 96.5 MMbpd in 1Q17—the lowest level in three years. Global crude oil demand rose to 97.4 MMbpd in 2Q17. The IEA expects global crude oil demand to rise 1.5% to 98 MMbpd in 2017.

The IEA added that global crude oil production rose by 720,000 barrels per day to 97.46 MMbpd in June 2017. Production rose due to the rise in production from OPEC and non-OPEC producers like the US, Brazil, and Canada.

Crude oil price performance  

US crude oil prices have fallen 13.3% in the last three months. Bearish fundamentals could weigh on crude oil prices.

In this series, we’ll discuss crude oil price drivers in more detail.


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