On November 12, US crude oil December futures closed ~$1.6 below the December 2019 futures. On November 5, the futures spread was at a discount of ~$0.55. On November 5–12, US crude oil December futures fell 5%.
Bearish sentiment for oil
The market sentiment towards the oil demand and supply situation is reflected in the futures spread. Usually, oil prices and the futures spread move in the same direction. In the past five trading sessions, the spread’s discount expanded, which might indicate a rise in the bearish sentiment for oil prices.
US crude oil prices have fallen by five percentage points. The factors that we discussed in Part 1 of this series could make oil prices fall more. Inventories at 3% above their five-year average might threaten any upside in oil prices, as we saw in the previous part.
As of November 5, US crude oil futures contracts for delivery between December 2018 and December 2019 were priced in ascending order. The price pattern is a negative sign for ETFs that follow US crude oil futures like the ProShares Ultra Bloomberg Crude Oil ETF (UCO) and the United States 12 Month Oil ETF (USL).