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Crude Oil Futures Rose Due to Record Gasoline Demand

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Nov. 20 2020, Updated 12:10 p.m. ET

US crude oil futures  

September WTI (West Texas Intermediate) crude oil futures contracts rose 0.87% to $49.59 per barrel on August 2, 2017. October Brent crude oil futures contracts rose 1.1% to $52.36 per barrel on August 2, 2017.

ETFs that track US crude oil futures like the United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose 0.5% and 1.1%, respectively, on August 2, 2017.

WTI and Brent crude oil prices are near a two-month high. US crude oil prices have risen ~16% from their ten-month low on June 21, 2017.

Prices rose due to the following:

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  • Weekly US gasoline demand hit a record of 9,842,000 bpd (barrels per day) on July 21–28, 2017.
  • US crude oil inventories fell by 1.5 MMbbls (million barrels) for the week ending July 28, 2017.
  • US gasoline and distillate inventories fell last week.
  • US crude oil refinery demand rose by 123,000 bpd to 17,408,000 bpd on July 21–28, 2017.
  • Bullish momentum in the S&P 500 Index (SPY) (SPX-INDEX) could support oil and gas prices.
  • The US dollar (UUP) is near a 13-month low.

Read Is the Worst Over for the Crude Oil Market? for more bullish drivers. However, US crude oil prices have fallen 13.3% so far in 2017. Prices fell due to the following:

  • Crude oil production rose in the US, Brazil, Canada, Libya, and Nigeria.
  • US crude oil rigs rose by 392 or 105% year-over-year as of July 28, 2017.
  • OPEC’s crude oil production rose in June 2017 and July 2017.
  • US crude oil exports rose.

Volatility in crude oil prices impacts oil producers like QEP Resources (QEP), ConocoPhillips (COP), PDC Energy (PDCE), and Sanchez Energy (SN). Prices might not maintain the recent rally due to the following:

  • Libya’s crude oil production is near a four-year high. It’s expected to hit 1.25 MMbpd by 2017.
  • OECD (Organisation for Economic Co-operation and Development) countries’ crude oil inventories are rising on a seasonally-adjusted basis.
  • Vehicles are becoming more fuel efficient.
  • US crude oil production rose last week

Crude oil fundamentals and moving averages suggest that crude oil (RYE) (VDE) prices could trade around $50 per barrel in the short term.

In this series, we’ll look at crude oil drivers.

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