Crude oil futures
January US crude oil futures (USO) (UWT) contracts rose 1.6% to $58.95 per barrel on November 24, 2017. It was the highest level since June 2015. Oil (BNO) (DWT) prices rose 4.1% in the last five trading sessions. They rose due to supply outages in the US, renewed optimism about ongoing production cuts, and an unexpected fall in US oil inventories. The weak dollar (UUP) also helped oil (DBO) (UCO) prices last week. However, US crude oil production hit a record for the week ending November 10, 2017. It capped the upside for oil prices.
US crude oil supply outage
The Keystone pipeline was shut down due to a leak in South Dakota on November 16, 2017. It transports 590,000 bpd (barrels per day) of crude oil from Canada to the US. The pipeline is expected to be offline for several weeks. The supply outage helped oil prices last week. As a result, US crude oil (SCO) (USL) futures have been in backwardation for many years. During backwardation, active oil futures trade higher than the forward oil futures contracts. Backwardation helps to draw down the inventory, which is bullish for oil (OIL) (DTO) prices.
Wall Street’s performance
The Dow Jones Industrial Average Index (DIA) rose 0.14% to 23,557.99 on November 24, 2017. The S&P 500 (SPY) rose 0.2% to 2,602.42 on the same day. Similarly, the NASDAQ (QQQ) rose 0.3% to 6,889.16 on November 24, 2017. The IT (XLK) (VGT) and materials (XLB) sectors supported SPY on November 24, 2017.
In this series, we’ll discuss OPEC’s meeting, the US dollar, Cushing oil inventories, the US oil rig count, and crude oil price drivers this week.