US crude oil futures
September US crude oil (IEZ) (XES) (USL) futures contracts rose 0.8% and closed at $49.56 per barrel on August 9, 2017. Brent crude oil futures contracts rose 1.1% to $52.70 per barrel on the same day.
Crude oil futures rose for the first time in three days. Prices rose due to the following:
- US crude oil refinery demand hit 17.57 MMbpd (million barrels per day) for the week ending August 4, 2017. It’s the highest level since 1982.
- US crude oil inventories fell by 6.5 MMbbls (million barrels) compared to market estimates of 2.7 MMbbls for the week ending August 4, 2017.
- A fall in US crude oil imports and a rise in refinery capacity utilization last week also supported crude oil prices.
- Saudi Arabia will likely cut crude oil exports to worldwide customers by at least 520,000 bpd (barrels per day) in September 2017 due to OPEC’s deal.
- 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.
US crude oil (USO) (UCO) prices are near a two-month high. They have risen ~16% from their ten-month low on June 21, 2017. Higher crude oil prices benefit crude oil ETFs and oil and gas producers. However, they have fallen 13% year-to-date due to the bearish drivers mentioned below:
- Libya’s crude oil production is near a four-year high.
- Monthly US crude oil production hit a 16-month high.
- US crude oil rigs rose 101% year-over-year as of August 4, 2017.
- OPEC’s crude oil production rose in June 2017 and July 2017.
- US crude oil exports have risen in 2017.
Crude oil (XLE) (XOP) prices might not sustain the rally due to the following reasons:
- A fall in crude oil and gasoline demand is expected after the summer ends.
- Crude oil production could rise in Canada, Brazil, and the US.
- Libya’s crude oil production is expected to hit 1.25 MMbpd by the end of 2017.
- Global crude oil inventories are rising on a seasonally-adjusted basis.
- Vehicles are becoming more fuel efficient.
September crude oil futures are trading above their 20-day, 50-day, and 100-day moving averages. However, they’re below their 200-day moving averages. It suggests that crude oil (SCO) (BNO) prices could trade around $50 per barrel in the near term.
In this series, we’ll look at crude oil drivers.