US and Brent crude oil futures
US crude oil (UCO) (SCO) futures contracts for February delivery rose 0.3% to $60.62 per barrel at 12:51 AM EST on January 2, 2018. Brent (BNO) crude oil futures contracts rose 0.3% to $67.11 per barrel during the same time. Oil prices (UWT) (DBO) rose due to ongoing production cuts and strong crude oil demand.
US and Brent crude oil prices are at their mid-2015 highs. Both of the benchmarks opened above $60 per barrel in January for the first time since 2014.
Crude oil prices
US crude oil (UCO) (SCO) prices rose ~12.4% in 2017—compared to 45% in 2016. Brent crude oil prices rose 17% in 2017 and 52% in 2016. Both of the benchmarks are at a multiyear high due to several bullish factors like the supply outage in Britain, Libya, Nigeria, Venezuela, and Iraq. The fall in global and US crude oil inventories also supported crude oil prices. However, the extension of ongoing production cuts had been the major driver. Strong crude oil demand from China also helped oil prices.
Higher oil (DBO) prices benefit funds like the Energy Select Sector SPDR Fund (XLE) and the Vanguard Energy ETF (VDE). These ETFs have exposure in energy companies like ConocoPhillips (COP), ExxonMobil (XOM), and Chevron (CVX).
Wall Street’s performance
The Dow Jones Industrial Average Index, NASDAQ (QQQ), and S&P 500 (SPY) hit a record on December 18, 2017. The NASDAQ, Dow Jones Industrial Average (DIA), and SPY rose 28.2%, 25.2%, and 19.5%, respectively, in 2017.
In 2017, SPY had the biggest annual gain since 2013. Wall Street rose due to the improving US economy and strong US corporate earnings growth. The US corporate tax has been reduced to 21% from 35% in 2018. It would drive corporate profits and economy. However, some experts think that the gains would be limited or short-lived.
In this series
In this series, we’ll discuss the US dollar, Cushing inventories, US oil rigs, and some important drivers for oil prices this week.