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Crude Oil Futures: What Could Drive Volatility This Week?

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Energy calendar 

On November 28, 2017, the American Petroleum Institute will publish its weekly crude oil inventory report. On November 29, 2017, the U.S.  Energy Information Administration will release its crude oil inventory report. OPEC’s meeting will be held on November 30, 2017. On December 1, 2017, Baker Hughes will release its US oil rig count data. 

All of these events could drive oil (UWT) (USL) prices this week. US (DTO) (OIL) and Brent (BNO) oil are near a three-year high. Higher oil prices benefit energy producers (XES) (PXI) like Marathon Oil (MRO), Occidental Petroleum (OXY), PDC Energy (PDCE), and Sanchez Energy (SN).

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Bullish crude oil price drivers  

US crude oil (DWT) (UCO) futures hit $58.95 per barrel on November 24, 2017—the highest level in nearly three years. Oil prices rose due to OPEC’s production cuts, the fall in OECD crude oil inventories, and the supply outage in Libya, Iraq, Nigeria, and Venezuela.

Any fall in US oil inventories and positive announcements related to ongoing productions cuts could benefit oil prices. For more updates on OPEC’s meeting, read Part 2 of this series.

Bearish crude oil price drivers 

US crude oil prices hit $26.21 per barrel on February 11, 2017—the lowest level in 13 years. Any rise in US oil production and rigs could pressure oil (SCO) (DBO) prices this week. Any estimates of slowing oil demand in 2017 and 2018 could also pressure oil (BNO) (USL) prices.

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Crude oil volatility index

The CBOE Crude Oil Volatility Index (OVX) rose 0.19% to 26.88 on November 24, 2017—a three-week low. The low volatility index suggests that traders are expecting fewer sharp moves in oil prices. OVX was at 51 on November 29, 2016, before OPEC’s meeting in November 2016. Oil prices rose 9.3% after the meeting.

Moving averages                     

January US crude oil futures are above their 100-day, 50-day, and 20-day moving averages on November 24, 2017. It suggests that crude oil futures could trade higher.

Read Could Crude Oil Futures Extend Their Rally? and Risks in the US Natural Gas Market Next Week for the latest updates on oil and gas.

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