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What Could Drive Crude Oil Futures for the 1st Week of 2018


Nov. 20 2020, Updated 3:57 p.m. ET

Crude oil futures  

February WTI crude oil (DBO)(USO) futures contracts rose 0.3% to $59.84 per barrel on December 28. Brent oil (BNO) futures rose 0.4% to $66.72 per barrel on the same day. A larger-than-expected draw in US crude oil inventories and unexpected decline in US crude oil production supported oil (DWT) prices. The EIA published the data on December 28.

Oil prices (UWT) were near a multi-year high, which benefits the ProShares Ultra Bloomberg Crude Oil (UCO). The ETF rose 1% to 23.2 on December 28.

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Drivers for crude oil futures

The ongoing oil supply outage in Britain and Libya also helped oil (SCO) prices for the last few days. However, a supply outage could ease in early January 2018, which could pressure oil (USL) prices. Any rise in US production could also pressure oil prices.

The extension of ongoing production cuts and higher compliance with pledged cuts would help oil prices in 2018. Any decline in US and global crude oil inventories could also support oil prices. Prices are expected to begin 2018 on a bullish note.

US oil prices have gained ~14% so far in 2017. Higher oil (USO) prices favor oil producers (VDE)(XLE) like Callon Petroleum (CPE), Parsley Energy (PE), and Occidental Petroleum (OXY).

Wall Street  

The Dow Jones Industrial Average Index (DIA), the S&P 500 (SPY), and NASDAQ (QQQ) advanced by 0.26%, 0.18%, and 0.16%, respectively, on December 28. All three indices hit a record on December 18.

The S&P 500 (SPY) gained ~20% in 2017. It’s the biggest annual gain since 2013. SPY advanced due to improving US economy and strong US corporate earnings growth.

The IT (XLK)(VGT), consumer discretionary (XLY)(VCR), materials (XLB), and healthcare (XLV) rose more than 20% in 2017. They supported SPY the most in 2017. They should also drive SPY in 2018. 

In this series   

This series covers US crude oil inventories and production. It also covers US gasoline and distillate inventories.


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