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Will the Recovery in Oil Prices Last?

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Mar. 16 2018, Published 3:46 p.m. ET

US crude oil

On March 15, US crude oil April 2018 futures rose 0.4% and closed at $61.19 per barrel. US crude oil ETFs’ price performance on the day was as follows.

  • The United States Oil ETF (USO) rose 0.5%.
  • The PowerShares DB Oil ETF (DBO) rose 0.3%.
  • The Credit Suisse X-Links WTI Crude Oil Index ETN (OIIL) rose 0.2%.
  • The ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose 1%.

On March 15, the US dollar gained 0.5%, which could have limited the upside in oil prices on the day. The PowerShares DB Commodity Tracking ETF (DBC) closed 0.1% lower on March 15. A stronger dollar is generally negative for commodities.

Based on the IEA’s “Oil Market Report” on March 15, oil demand could rise by 1.5 MB/d (million barrels per day) in 2018. The current forecast figures were 0.1 MB/d higher than the earlier forecast—a factor that could have supported oil prices on March 15 despite the gain in the US dollar. Moreover, the S&P 500 closed lower in the last four trading sessions, which could be a negative development for oil prices. We’ll discuss this outlook more in Part 3 of this series.

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Natural gas

On March 15, natural gas April 2018 futures fell 1.8% and settled at $2.68 per million British thermal units. On March 15, the EIA reported a fall of 93 Bcf (billion cubic feet) in natural gas inventories for the week ended March 9. However, the market had expected a fall of 99 Bcf. The miss in inventory figures could have caused the fall in natural gas prices.

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