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The Big Push for Oil this Year


Nov. 20 2020, Updated 4:30 p.m. ET

US crude oil

Between September 14 and 21, US crude oil November futures rose 2.9% and closed at $70.78 per barrel. In September, US crude oil active futures have risen 1.4% after rising 1.5% in August. The US dollar’s fall, as well as the OPEC–non-OPEC meeting, may have boosted oil prices. Gasoline inventories’ significant fall may have been behind WTI’s outperformance of Brent oil.

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The big push for oil this year

The meeting between OPEC and non-OPEC producers concluded this weekend. Member countries have decided not to raise their oil output amid looming US sanctions over Iran energy exports. This move might push oil even higher. At around 5:20 AM CT, US crude oil prices traded at $72.11 per barrel—$2.04 lower than the highest closing for US crude oil active futures since November 2014. On June 29, 2018, US crude oil active futures settled at $74.15 per barrel—their highest closing level since November 24, 2014.

Important price points for this week

Markets might see a new high for oil prices. US crude oil prices’ 100-day moving average of $68.96 is their immediate support. Any changes in US crude oil prices could be important for US equity indexes such as the S&P 500 (SPY) and the Dow Jones Industrial Average (DIA), which rose 0.8% and 2.3% last week, respectively. Next in this series, we’ll discuss how oil affects these equity indexes.

Oil prices’ rise is a positive development for oil-weighted stocks. Denbury Resources (DNR), Hess Corporation (HES), and Carrizo Oil & Gas (CRZO), the strongest among oil-weighted stocks, rose 5.9%, 6.8%, and 8.5%, respectively, last week.

Natural gas

Between September 14 and 21, natural gas November futures rose 8.1% and settled at $2.974 per million British thermal units, the highest closing price for active natural gas futures since August 21. The forecast of a rise in demand due to higher temperatures this week kept natural gas prices at a one-month high in the last trading session. This week, US natural gas consumption is expected at 82.3 Bcfpd (billion cubic feet per day), compared to earlier estimates of 82 Bcfpd, according to estimates from Reuters analysts.

Natural gas’s 50- and 200-day moving averages, at $2.85 and $2.83, respectively, will likely be important support zones for natural gas prices.


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