US crude oil futures 

WTI (West Texas Intermediate) crude oil (XLE) (VDE) (IEZ) futures contracts for October delivery rose 1.2% to $48.41 per barrel on August 23, 2017.

Brent and WTI crude oil futures rose for the second consecutive day due to the following factors:

  • US crude oil inventories fell 3.3 MMbbls (million barrels) between August 11 and August 18, 2017. Inventories fell for the eighth straight week.
  • Cushing crude oil inventories fell 0.5 MMbbls between August 11 and August 18, 2017.
  • A possible storm in the Gulf Coast region on August 25, 2017, could hamper crude oil production and refinery activity in that region.
  • US gasoline inventories fell last week.
  • The US dollar (UUP) fell 0.34% to 93.14 on August 23, 2017, near its 13month low.
  • OPEC crude oil production in August 2017 is expected to fall.

Will Crude Oil Futures Rise or Fall Next Week?

WTI crude oil futures are down 15.2% YTD (year-to-date) due to bearish catalysts. Volatility in crude oil prices impacts oil ETFs and oil producers. Below are the YTD returns ranked by assets under management for the top five crude oil ETFs:

  • The United States Oil ETF (USO) has fallen 15.7% YTD.
  • The ProShares Ultra Bloomberg Crude Oil (UCO) has fallen 32% YTD.
  • The iPath S&P GSCI Crude Oil Total Return ETN (OIL) has fallen 21% YTD.
  • The VelocityShares 3x Long Crude Oil ETN (UWT) has fallen 48.1% YTD.
  • The PowerShares DB Oil ETF (DBO) has fallen 14.4% YTD.

WTI crude oil (XOP) (SCO) prices have risen almost 13% from their ten-month low hit in late June 2017. However, crude oil prices might not sustain the rally due to the following reasons:

  • US crude oil production is at a two-year high.
  • US crude oil rigs have risen ~140% from lows in May 2016.
  • US gasoline demand could fall in the coming months.
  • Libya’s crude oil production is expected to rise in the coming months.
  • Vehicles are becoming more fuel efficient.

WTI crude oil futures could be range-bound or trade lower next week due to the bearish fundamentals mentioned above.

Series overview 

In this series, we’ll look at Libya’s supply outage, US crude oil inventories, production, and gasoline and distillate inventories.

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