Crude Oil Futures Hit a 3-Year High

Crude oil futures 

February WTI crude oil futures (UWT) contracts rose 2.1% to $61.63 per barrel on January 3, 2018. Brent oil (BNO) futures also rose 1.9% to $67.84 per barrel on January 3, 2018. Prices rose due to public protests against the Iranian government for the sixth consecutive day. The protests, due to weak economic conditions, might result in oil supply disruption. The expectation of a fall in US crude oil inventories supported oil prices. Economic data from the US also supported oil prices.

A major winter storm started in the US on January 3, 2018. The storm could lead to freezing temperatures, which might have supported oil (DBO) and product prices. WTI crude oil (USL) is at the highest settlement since December 2014. It benefits funds like the United States Oil ETF (USO), which rose 2.2% to 12.3 on January 3, 2018.

Crude Oil Futures Hit a 3-Year High

API’s crude oil inventories  

The API (American Petroleum Institute) released its crude oil inventory report on January 3, 2018. US crude oil inventories fell by 5 MMbbls (million barrels) on December 22–29, 2017, according to the API. It’s the fifth straight week of a major fall in US crude oil inventories, according to the API.

Analysts estimated that US crude oil inventories could have fallen by 5.2 MMbbls on December 22–29, 2017. Any fall in inventories is bullish for oil prices. Higher oil (UCO) prices favor energy companies (XLE) like W&T Offshore (WTI) and Gastar Exploration (GST). These stocks rose more than 10% on January 3, 2018.

Wall Street’s performance 

The NASDAQ (QQQ) rose 0.8% to 7,065.5, while the Dow Jones Industrial Average Index (DIA) rose 0.4% to 24,922.6 on January 3, 2018. The S&P 500 (SPY) rose 0.6% to 2,713.06 on the same day. All three of the indexes hit a record on January 3, 2018.

The energy (XOP), IT (XLK), and healthcare (XLV) sectors supported SPY the most on January 3, 2018. Eight out of the 11 major sectors in SPY rose on the same day.

Series overview 

In this series, we’ll discuss the API’s gasoline and distillate inventories, Iran and Russia’s crude oil production, and OPEC’s ongoing production cuts.