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Brent and US Crude Oil before OPEC’s Meeting

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US crude oil

On June 8–15, US crude oil July futures fell 1%. On June 15, US crude oil July futures settled at $65.06 per barrel. Last week, the US dollar rose 1.3%—a negative development for oil prices. The PowerShares DB US Dollar Bullish ETF (UUP), which tracks the US dollar, rose 1.3% last week.

The iShares S&P GSCI Commodity-Indexed Trust (GSG) fell 2.8% in the seven days to June 15. The fall in US crude oil prices might have been behind the fall in GSG, which has ~63.5% exposure to the energy sector.

Brent crude oil underperformed US crude oil

On June 8–15, Brent crude oil August futures fell 3.9%, which was 2.9 percentage points more than the fall in US crude oil. The United States Brent Oil ETF (BNO), which tracks Brent crude oil futures, fell 4%. The Brent-WTI spread contracted by $2.34 to $8.38 in the week ending June 15.

Saudi Arabia and Russia have indicated the possibility of increasing their oil production levels ahead of OPEC’s crucial meeting scheduled on June 22—a factor that has dragged oil prices lately. The possibility of increased crude oil production is likely behind Brent crude oil’s underperformance compared to US crude oil.

In the past five trading days, gasoline and heating oil futures fell 4.4% and 3.6%, respectively, and underperformed US crude oil prices. The United States Gasoline ETF (UGA) fell 4.2% during the same period.

Natural gas

On June 8–15, natural gas July futures rose 4.6% and settled at $3.02 per million British thermal units on June 15—the highest closing level since January 31. The United States Natural Gas ETF (UNG) rose 4.4%. Hot weather forecasts could be behind natural gas’s rise.

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