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Crude Oil Futures and Wall Street Extends the Rally

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Crude oil futures 

Brent (BNO) oil futures rose 0.3% to $68.07 per barrel on January 4, 2018. US crude oil (USO) futures contracts for February delivery also rose 0.6% to $62.01 per barrel on January 4, 2018. It’s the highest settlement since December 2014. US crude oil (UWT) prices are at a three-year high, which favors the ProShares Ultra Bloomberg Crude Oil (UCO). UCO rose 0.5% to 24.7 on January 4, 2018.

Drivers for crude oil futures 

A massive draw in US crude oil inventories supported oil (USL) prices on January 4, 2018. The EIA released the data on the same day.

Iran is OPEC’s third-largest crude oil producer. Public protests against the Iranian government continued for the seventh day on January 4, 2018. Geopolitical tension might cause supply disruptions, which supported oil prices on January 4, 2018.

The extension of ongoing production cuts, strong demand, and the supply outage in Britain and Libya boosted Brent (BNO) oil prices more than 10% from the lows in December 2017. Higher oil (SCO) prices favor oil companies (XOP) (IEZ) like Contango Oil & Gas (MCF) and Transocean (RIG). These stocks rose more than 5% on January 4, 2018.

Wall Street 

The NASDAQ (QQQ) rose 0.18% to 7,077.9 on January 4, 2018. The Dow Jones Industrial Average Index (DIA) rose 0.61% to 25,075.1, while the S&P 500 (SPY) rose 0.4% to 2,723.99 on January 4, 2018. All three of the indexes hit a record on January 4, 2018. The US stock market extended its rally due to strong global economic growth data. 

The S&P 500 (SPY) rose ~1.5% in the last five trading days. The energy (VDE), materials (XLB), and IT (VGT) sectors supported SPY the most during this period. The utilities (XLU) (VPU) and real estate (VNQ) (IYR) sectors dragged SPY the most during this period.

In this series   

In this series, we’ll discuss some bullish and bearish drivers of crude oil prices.

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