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Crude Oil Futures and the S&P 500 Could Move Together

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US crude oil futures 

March WTI crude oil futures contracts fell 0.53% to $65.45 per barrel on February 2, 2018. Brent oil futures contracts also fell 1.5% to $68.5 per barrel on the same day. Prices fell due to the recovering dollar and near-record US crude oil production.

Moves in oil prices impact ETFs like the United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO). USO and UCO fell 1.5% and 2.9%, respectively, on February 2, 2018.

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Crude oil performance  

US crude oil prices declined 1% last week. However, they have risen 8.4% year-to-date due to ongoing production cuts and strong demand. These drivers could push oil prices this week too.

Meanwhile, oil prices are near a three-year high, which benefits the Vanguard Energy ETF (VDE) and the iShares U.S. Energy ETF (IYE). VDE and IYE have exposure to oil majors like Chevron (CVX) and ExxonMobil (XOM). These stocks fell more than 5% on February 2, 2018. Oil majors fell due to the less-than-expected 4Q17 earnings results, which were reported on February 2, 2018.

Wall Street’s performance 

The Dow Jones Industrial Average (DIA) dropped 2.5% to 25,520.9, while the S&P 500 (SPY) fell 2.1% to 2,762.1 on February 2, 2018. The NASDAQ (QQQ) fell 1.9% to 7,240.9 on the same day. The rise in US bond yields pressured the US stock market on February 2, 2018. However, all three indexes closed at a record level on January 26, 2018.

The S&P 500 fell 3.6% in the last five trading sessions. The energy, healthcare, and materials sectors fell more than 5% in the last five trading sessions. They dragged SPY the most in the last five sessions. However, SPY has risen 3.3% year-to-date. The sectors have also risen 21% in the last 12 months. The bullish momentum could push SPY higher.

Series overview  

In this series, we’ll discuss the US dollar, US crude oil production, Cushing inventories, US oil rigs, and some drivers for oil prices this week.

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