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Will US Crude Oil Futures Test a 3-Year High?

Gordon Kristopher - Author
By

Nov. 20 2020, Updated 12:52 p.m. ET

Energy calendar  

The API (American Petroleum Institute) will release its weekly crude oil inventory report on January 3, 2018. The EIA will publish its crude oil inventory report on January 4, 2018. Baker Hughes will release its US oil rig report on January 5, 2018.

All of these events could influence US crude oil (DBO) prices. US oil (UWT) prices rose 3.3% last week due to several bullish drivers, which we discussed in Part 1 of this series. Higher oil (DWT) prices favor oil and gas producers (IEZ) (PXI) like Stone Energy (SGY), Contango Oil & Gas (MCF), and PDC Energy (PDCE).

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Bullish drivers for US crude oil futures 

US crude oil (USO) futures hit $60.73 per barrel in early morning trade on January 2, 2018—the highest level since June 2015. Prices increased due to production cuts and strong demand.

Higher compliance with ongoing production cuts, strong oil demand, and a fall in OPEC’s crude oil production and exports could support oil prices.

Any fall in US and Cushing crude oil inventories could also push oil (USL) prices higher. Any unplanned supply outage could benefit oil prices.

Bearish drivers for US crude oil prices  

US crude oil (UWT) futures hit $26.21 per barrel on February 11, 2017—the lowest level in nearly 14 years. Any increase in US crude oil production could limit the upside for oil (DBO) prices.

Crude oil transported through Britain’s North Sea Forties pipeline seems to be getting back to normal capacity. Similarly, the Libyan oil pipeline has been repaired. The easing supply outage in Libya and Britain could see a drop in oil prices.

Crude Oil Volatility Index 

The CBOE Crude Oil Volatility Index (OVX) rose 3% to 21.3 on December 29, 2017, which was near a three-year low. It suggests less volatility in oil (UCO) prices.

Read Traders Tracking Key Drivers of Crude Oil Futures in 2018 for the latest updates on crude oil.

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