US crude oil
On April 2, 2018, US crude oil May futures fell 3% and closed at $63.01 per barrel. On the same day, oil-weighted stocks California Resources (CRC), Denbury Resources (DNR), and Whiting Petroleum (WLL) fell 6.2%, 6.9%, and 3.3%, respectively. Energy ETFs that hold energy stocks like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Energy Select Sector SPDR ETF (XLE) fell 3.4% and 2% on April 2, 2018.
Bearish factors for oil prices
On April 2, 2018, the S&P 500 Index fell 2.2%, which might be a bearish factor for oil prices. Usually, sentiments in oil and equity markets are interrelated. On April 1, 2018, China announced new tariffs for US products like meat, fruit, and other products. The new tariffs renewed global trade war concerns.
In March 2018, Russia’s oil output rose to 10.97 MMbpd (million barrels per day)—an 11-month high. Russia’s output was ~23,000 barrels per day more than the promised output ceiling under the production cut—another concern for oil bulls.
On April 1, 2018, Iraq’s cabinet decided to add 1.5 MMbpd to its existing capacity by 2022—a factor that could have a negative impact on oil prices in the long term. In January 2018, Iraq’s oil capacity was close to 5 MMbpd.
Other important factors
In this series, we’ll discuss other key factors for US crude oil prices like US crude oil production, inventory levels, and US crude oil exports.
On April 2, 2018, US crude oil active futures were 0.2%, 0.1%, 3.7%, and 15.3% above their 20, 50, 100, and 200-day moving averages, respectively. If US crude oil active futures break below the shorter-term moving averages, then prices might witness additional short-term weakness.