Crude Oil Futures Hit Multi-Month Highs but S&P 500 Falls

Crude oil futures 

November US crude oil (DBO)(DWT)(SCO) futures contracts rose 3% to $52.22 per barrel on September 25—the highest level since April 2017.

November Brent crude oil (BNO) futures contracts rose 3.8% to $59.02 per barrel on September 25—the highest level since July 2015. Turkey threatened to block 700,000 bpd (barrels per day) of crude oil flowing through oil pipelines across its land from Iraq’s Kurdistan region to the outside world. Turkey opposes the Kurdish independence referendum in Iraq.

Major oil producers said that the oil market is rebalancing in their September 22, OPEC and non-OPEC producers meeting. This bullish sentiment also supported oil prices.

Crude Oil Futures Hit Multi-Month Highs but S&P 500 Falls

Brent and US crude oil (USO)(UCO) prices have risen 25% and 18% in the last three months due to several bullish drivers. Higher crude oil prices have a positive impact on oil and gas producers’ (XLE)(VDE) earnings, including Chevron (CVX), Hess (HES), and Bonanza Creek Energy (BCEI).

S&P 500 and Dow Jones  

The S&P 500 (SPY) fell 0.22% to 2,496.66 on September 25. Likewise, the Dow Jones Industrial Average Index (DIA) fell 0.24% to 22,296.09 on the same day. The S&P 500 and the Dow Jones Industrial Average hit record levels of 2,508 and 22,410 on September 20.

The S&P 500 rose 2.2% in the last month. The energy (XOP)(OIH), industrials (XLI)(ITA), and materials (XLB) sectors have risen 9.8%, 5.5%, and 4.6%, respectively, in the last month. The telecommunication (VOX)(IYZ), financials (XLF) (VFH), and healthcare (XLV) sectors have risen more than 3% in the last one month. These sectors have supported the S&P 500 in the last month. 

Series overview  

In this series, we’ll look at the Brent and WTI crude oil spread, Iraq’s Kurdish independence referendum, and President Trump’s impact on Iran’s crude oil production. We’ll also discuss OECD crude oil inventories and some crude oil price forecasts.