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US Crude Oil: Is $50 per Barrel Inevitable?

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Crude oil futures

On July 27, 2017, US crude oil (USO) (DBO) September futures rose 0.6% and closed at $49.04 per barrel. The EIA (Energy Information Administration) oil inventory and production data released on July 26, 2017, boosted oil prices in the trailing week, along with Saudi Arabia’s decision to cut its oil exports.

Crude oil inventories and US crude oil production fell on a week-over-week basis for the week ended July 21, 2017. During the same week, US crude oil inventories fell by 7.2 MMbbls (million barrels)—more than double the market’s expected fall.

US crude oil production also fell by 19,000 barrels per day to 9.4 million barrels per day for the week ended July 21, 2017. These bullish factors could help US crude oil futures surpass the $50 level.

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In Part 4 of this series, we’ll discuss a price range forecast for oil prices in the coming week. From July 20 to July 27, 2017, US crude oil September futures rose 4.5%. During the same period, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 0.1% and 0.9%, respectively. Part 2 of this series will analyze the relationship between oil prices and equity indexes.

Natural gas

On July 27, 2017, natural gas (UNG) (FCG) September futures rose 1.8% and closed at $2.97 per MMBtu (million British thermal units). On the same day, EIA data showed a rise of just 17 Bcf (billion cubic feet) in natural gas inventories for the week ended July 21, 2017. This was less than the market expectations and on par with last year’s rise.

Inventory data boosted natural gas prices on July 27, 2017. During the week of July 20–27, 2017, natural gas prices were down 2.2% due to mild weather forecasts.

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