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US Crude Oil Prices Could Fall More

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US crude oil

On June 4, US crude oil July futures fell 1.6% and settled at $64.75 per barrel—the lowest closing level for active US crude oil futures since April 9. On May 25–June 4, US crude oil July futures fell 4.6%.

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Energy stocks and ETFs

On June 4, Callon Petroleum (CPE), Oasis Petroleum (OAS), and Diamondback Energy (FANG) fell 7.5%, 5.7%, and 3.3%, respectively—the largest losses on our list of oil-weighted stocks.

Meanwhile, the iShares US Energy ETF (IYE) and the Energy Select Sector SPDR ETF (XLE), which hold energy stocks, fell 1% and 0.9% on the same date.

Important factors

Rising US crude oil production and expectations of Saudi Arabia and Russia easing self-imposed production caps are behind US crude oil’s decline. On June 22, OPEC members will meet to discuss the fate of the production cut deal. In Part 2 of this series, we’ll discuss another bearish factor for oil—rising oil rigs. In Part 3, we’ll discuss the US oil inventory levels, which might help slow down oil’s fall.

Will US crude oil prices fall more?

On June 4, US crude oil active futures were 4.5%, 7.6%, and 0.8% below their 20-day, 50-day, and 100-day moving averages, respectively. On the same date, US crude oil futures fell below their 100-day moving average. US crude oil active futures trading below key moving averages is a bearish signal for prices, which indicates more downside.

Oil’s 200-day moving average at $59.42 would be an important support for US crude oil prices. The level is ~9% lower than the current prices.

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