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Will Crude Oil Futures Extend the Bullish Momentum?

Gordon Kristopher - Author
By

Dec. 4 2020, Updated 10:52 a.m. ET

Energy calendar  

On May 8, the EIA released its monthly Short-Term Energy Outlook report. On May 9, the EIA will release its US crude oil production data. Baker Hughes, a GE Company (BHGE), is scheduled to release its US oil rig count report on May 11.

All of these events could impact oil prices this week. WTI oil prices increased ~3.1% on April 30–May 7. The Vanguard Energy ETF (VDE) increased ~0.5% during this period. VDE aims to follow the performance of an index of energy stocks. The Energy Select Sector SPDR ETF (XLE) increased 0.2% on April 30–May 7. XLE aims to follow the performance of the Energy Select Sector Index. Marathon Oil (MRO), Devon Energy (DVN), and Hess (HES) account for 4.2% of XLE’s holdings. These stocks rose ~8.3%, 6.4%, and 3.9%, respectively, on April 30–May 7. These stocks were among the top percentage gainers in XLE’s holdings during this period.

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US crude oil futures’ peak  

US crude oil futures contracts closed at $70.73 per barrel on May 7—the highest settlement since November 2014. Geopolitical tension, supply cutsstrong oil demand, and supply outages have supported oil prices.

Bearish drivers 

Record US crude oil production, profit-booking, and a larger-than-expected increase in Cushing inventories could pressure oil prices this week. 

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Bullish drivers 

Rising geopolitical tension between the US and Iran, unexpected supply outages, and the expectation of an output cut extension into 2019 could support oil prices in the next few months.

Crude oil futures’ moving averages 

June WTI oil futures were trading above their 20-day, 50-day, and 100-day moving averages on May 7. Fundamental factors and charts suggest that prices could trend higher.

Read Federal Reserve and US Supplies Affect Crude Oil Prices and Will Reinstating Sanctions on Iran Affect US Natural Gas Futures? for the latest updates on crude oil and natural gas.

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