22 Dec

Could US Tax Reform Pose a Threat to Oil Prices?

WRITTEN BY Rabindra Samanta

US crude oil

On December 21, 2017, US crude oil (USO) (USL) February futures rose 0.5% and settled at $58.36 per barrel. US tax reforms could pose a problem for oil bulls, as lower taxes on the energy sector could bring down breakeven costs for US oil producers. Moreover, provisions related to capital expenditure could encourage investments in oil drilling and production, boosting US crude oil production and pressuring prices.

Could US Tax Reform Pose a Threat to Oil Prices?

US oil production stood at ~9.8 MMbpd (million barrels per day) in the week ended December 15, 2017, a record high. Between December 14 and December 21, 2017, US crude oil’s February futures rose 2.2%. Equity indexes such as the S&P 500 (SPY) and the Dow Jones Industrial Average Index (DIA) rose 1.2% and 1.1%. In the next part of this series, we’ll discuss oil’s influence on these equity indexes.

Natural gas

On December 21, 2017, natural gas’s (UNG) (BOIL) January futures fell 1.5% and closed at ~$2.60 per MMBtu (million British thermal unit)—1.5% above their lowest closing price in 2017. On the same day, the EIA (U.S. Energy Information Administration) announced natural gas inventory data for the week ended December 15, 2017. There was a fall of 182 Bcf (billion cubic feet) in natural gas inventories. However, ithe fall failed to boost natural gas prices. In the trailing week, natural gas prices fell 3.2%.

Latest articles

Canadian energy giant Enbridge’s (ENB) operations are diverse. Enbridge accounts for roughly two-thirds of Canada’s crude oil exports to the US.

Sprint (S) stock fell about 1.9% on Wednesday and closed the trading day at $5.63. It was trading 30.2% below its 52-week high of $8.06.

Harvest Health (HARV) reported its Q3 earnings yesterday. HARV posted revenue of $33.15 million, which was lower than analysts' estimate of $34.18 million.

Apple (AAPL) stock is up almost 68% year-to-date. AAPL has returned 50% in the trailing 12 months and 125% in the last five years.

While the media caters to Millennial preferences, there’s one economic sector that’s shifting to a more seasoned crowd: healthcare stocks.

Despite solid earnings growth this year, Energy Transfer stock fell close to its multiyear lows recently. Could this weakness be seen as an opportunity?