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Is US Crude Oil Nearing a Bear Market?



US crude oil prices

On August 16, US crude oil September futures rose 0.7% and settled at $65.46 per barrel—$0.45 above the lowest closing level in more than two months. On the same day, the Energy Select Sector SPDR ETF (XLE) rose 0.7%. The small rise in oil prices might also be behind a rise of 0.8% and 1.6% in the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA), respectively, in the last trading session. In Part 3 of this series, we’ll analyze US crude oil’s relationship with these equity indexes.

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In the trailing week, US crude oil futures fell 2%. Global economic growth concerns and the EIA’s (U.S. Energy Information Administration) inventory report could be behind the fall in oil prices. Based on the EIA’s inventory report released on August 15, US crude oil inventories were 1% above their five-year average. Oil inventories were higher than their five-year average for the first time since March 9—a bearish factor for oil prices. On March 9–August 16, US crude oil active futures rose 5.5%.

US crude oil nearing a bear market

On June 29, US crude oil active futures settled at $74.15 per barrel—the highest closing level for active US crude oil futures since November 24, 2014. On August 16, US crude oil prices were 11.7% below their 3.5-year high. Another fall of 9.4% would take US crude oil into a bear market.

In Part 4 of this series, we’ll discuss important price limits for US crude oil until next week.

Natural gas

On August 16, natural gas September futures fell 1.1% to $2.908 per MMBtu (million British thermal units). On the same day, the EIA reported that natural gas inventories rose by 33 Bcf (billion cubic feet) last week. A Reuters poll suggested that the inventories might rise by 31 Bcf for the same week. Next week, US natural gas consumption might fall by 1.9 Bcf per day from this week based on estimates from Reuters analysts.

In Part 5 of this series, we’ll discuss the important price levels for natural gas prices. Natural gas prices and the United States Natural Gas ETF (UNG) fell 1.6% and 1.4% in the trailing week.


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