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More Weakness in Oil Prices?

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US crude oil

On March 29–April 6, 2018, US crude oil May futures fell 4.4% and settled at $62.06 per barrel on April 6, 2018. On March 30, 2018, the markets were closed for Good Friday.

On March 29–April 6, 2018, US crude oil tracking ETFs had the following returns:

  • The United States Oil ETF (USO) fell 4.4%.
  • The United States 12 Month Oil ETF (USL) fell 3.3%.
  • The PowerShares DB Oil ETF (DBO) fell 2.7%.

On March 29–April 6, 2018, oil-weighted stocks Oasis Petroleum (OAS) and Concho Resources (CXO) fell 3.5% and 11.1%. Based on the latest quarterly production data, these energy stocks’ production mixes are at least 60% liquids. Liquids include crude oil, condensates, and natural gas liquids.

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Weakness in oil prices

Weakness in the equity market could have dragged oil last week, which we’ll discuss in Part 2.

Factors like Russia’s rising oil output and the US crude oil output at a weekly record contributed to oil’s fall.

Apart from these bearish factors, the oil rig count rose to 808 in the week ending April 6, 2018—the highest level since March 27, 2015. So, the oil rig count at its three-year high could increase the US crude oil output, which might cause more weakness in oil prices.

Natural gas

On March 29 and April 6, 2018, natural gas May futures fell 1.2% and settled at $2.701 per million British thermal units on April 6, 2018. Last week, supply concerns could have pulled natural gas prices lower. Natural gas bulls should stay cautious near the $2.74 level.

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