On January 17, US crude oil March futures fell 0.5% and settled at $52.36 per barrel. Rising oil production in the United States and concerns surrounding global economic growth might have caused oil prices to fall. In the trailing week, US crude oil prices fell 1%. However, the Energy Select Sector SPDR ETF (XLE) rose 0.9% on January 17. The S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 0.8% and 0.7%, respectively, which might have supported energy stocks. Next, we’ll discuss the key drivers for energy ETFs. In Part 3 of this series, we’ll analyze US crude oil’s relationship with these equity indexes. Integrated energy stocks like ExxonMobil (XOM) and Chevron (CVX) are also sensitive to oil prices.
IEA’s oil market report
The IEA (International Energy Agency) has kept global oil’s demand growth at 1.3 MMbpd (million barrels per day) and 1.4 MMbpd for 2018 and 2019, respectively—unchanged from the previous forecast. On January 18, the IEA released its monthly Oil Market Report. The IEA thinks that oil prices might have bottomed out for now. The oil market will likely need some time to rebalance. OPEC’s cuts should improve the supply situation. According to secondary sources, OPEC members’ oil output declined by 0.75 MMbpd month-over-month in December. OPEC released its Monthly Oil Market Report on January 17. Since October, OPEC’s oil production has fallen by 0.78 MMbpd—mostly inline with the OPEC and non-OPEC deal. However, Russia’s oil production rose to a record level of 11.5 MMbpd in December.