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Crude Oil Futures Hit a 6-Week High

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Crude oil futures 

The WTI (West Texas Intermediate) crude oil futures contracts for May delivery increased 2.6% to $65.17 per barrel on March 21, 2018. WTI crude oil active futures had the highest settlement since February 2, 2018. Brent oil futures rose 3% to $69.47 per barrel on March 21, 2018. Brent crude oil active futures had the highest settlement since February 1, 2018.

The United States Oil ETF (USO) and the United States Brent Oil ETF (BNO) track WTI and Brent oil futures, respectively. USO rose ~2.9% to 13.18 on March 21, 2018, while BNO rose 3.2% to 19.09 on the same day.

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Drivers for crude oil futures  

Crude oil prices increased on March 21, 2018, due to the surprise draw in US crude oil inventories and a decline in US gasoline and distillate inventories. The EIA released the data yesterday.

The weak dollar and geopolitical tensions also supported oil prices on March 21, 2018. The US Dollar Index depreciated 0.65% to 89.78 on March 21, 2018. The Power Shares DB US Dollar Bullish ETF (UUP) tracks the US dollar’s performance. UUP fell 0.8% to 23.4 on March 21, 2018.

Crude oil prices have struggled since January 26, 2018. However, US crude oil prices increased ~7% on March 14–21, 2018. The factors mentioned above along with strong demand and a higher compliance with production cuts supported oil prices during this period. The ProShares Ultra Bloomberg Crude Oil ETF (UCO) increased 14.9% during the same period. UCO targets to provide twice the daily return of an index of US crude oil futures contracts.

The PowerShares DB Oil Fund (DBO) rose 5.1% on March 14–21, 2018. DBO follows the DBIQ Optimum Yield Crude Oil Index Excess Return. The above chart shows that UCO outperformed other crude oil ETFs on March 14–21, 2018.

Series overview 

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

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