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US Crude Oil Futures Enter Bull Market, SPY Hit New Record

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US crude oil futures  

November WTI (West Texas Intermediate) crude oil (USO) (UWT) futures contracts rose 0.2% to $51.67 per barrel on September 29, 2017—a four-month high. Brent crude oil futures rose 0.23% and closed at $57.54 per barrel on September 29, 2017—near a 26-month high.

Brent (BNO) and WTI crude oil (UCO) (DWT) futures rose 9.4% in September 2017. They have risen 12% and 20% in 3Q17, respectively. The prices rose due to a recovery in US refinery crude oil demand and improving global crude oil demand. Major oil producers’ higher compliance with the production cut deal and the expectation of a deal extension beyond March 2018 also supported crude oil prices. The expectation of a crude oil supply outage in Iraq due to the Kurdish referendum also supported oil prices. The weak dollar (UUP) and supply outages helped oil prices in September.

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WTI crude oil prices enter a bull market 

In September, WTI crude oil (SCO) (USL) prices have risen 21.5% from the lows in June 2017. A gain of 20% or more signals the beginning of a bull market. US crude oil rigs slowed in 3Q17. The number of oil rigs fell by six in 3Q17. However, US crude oil rigs rose by 94 in 2Q17, which also supported crude oil prices. Higher crude oil prices have a positive impact on oil producers (XLE) (XOP) like Chevron (CVX), Apache (APA), Noble Energy (NBL), and Chesapeake Energy (CHK).

S&P 500 and Dow Jones  

The S&P 500 (SPY) and the NASDAQ (QQQ) closed at record levels of 2,519.36 and 6,495.96 on September 29, 2017. SPY posted its sixth consecutive month of gains. In September 2017, the Dow Jones Industrial Average Index (DIA), SPY, and NASDAQ rose 2.1%, 1.9%, and 1.1%, respectively.

The energy (VDE) (RYE), industrials (XLI) (ITA), financials (XLF) (VFH), and materials (XLB) sectors rose 10.3%, 5.2%, 5%, and 4.4%, respectively, in September. These sectors supported SPY in September 2017.

However, the utilities (XLU) (VPU), real estate (VNQ) (IYR), and consumer staples (XLP) (VDC) sectors limited the upside for SPY in September.

Series overview  

In this series, we’ll look at OPEC’s crude oil production in September 2017, the US dollar, crude oil price movements in the last 18 months, Cushing crude oil inventories, and the US crude oil rig count.

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