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Factors Keeping US Crude Oil below the $70 Mark

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Nov. 20 2020, Updated 4:15 p.m. ET

US crude oil below $70

Between July 20 and July 27, US crude oil September futures rose 0.6% and closed at $68.69 per barrel on July 27—the fifth consecutive closing for active US crude oil futures below the $70.00 mark.

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What’s keeping US crude oil below $70?

Expectations of rising supply levels and the rise in the US dollar last week could have kept US crude oil futures below the $70.00 mark. The 100-day moving average at $67.54 is expected to be an important support zone for US crude oil futures.

The rise in oil prices is a positive development for oil-weighted stocks. Concho Resources (CXO), Pioneer Natural Resources Company (PXD), and EOG Resources (EOG) rose 2.8%, 2.8%, and 5.6%, respectively, last week. These stocks were the outperformers among oil-weighted stocks.

Natural gas

Between July 20 and July 27, natural gas September futures rose 2.0% and settled at $2.782 per MMBtu (million British thermal units) on July 27. Bullish natural gas inventory data might have supported natural gas prices last week. 

On July 26, natural gas September futures rose 0.3% to $2.762 per MMBtu. On the same day, the EIA (Energy Information Administration) reported that natural gas inventories rose 24 Bcf (billion cubic feet) for the week ended July 20. The market had expected inventories to rise 36 Bcf, based on Reuters’ estimates.

Natural gas’s 100-day and 20-day moving averages at $2.80 could be an immediate resistance for natural gas prices.

More upside in natural gas prices could cause natural gas–weighted stocks like Antero Resources (AR) and Chesapeake Energy (CHK) to rise. However, these stocks fell 4.4% and 3.1%, respectively, last week.

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