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Will US Crude Oil Hit $60?

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Nov. 20 2020, Updated 10:30 p.m. ET

EIA inventory data

The EIA reported a fall of 8.6 MMbbls (million barrels) in US crude oil inventories to 445.9 MMbbls for last week. A Reuters poll had indicated a potential rise of ~2.9 MMbbls.

Today at 11:33 AM ET, US crude oil April futures reached $57.26, just $0.55 below the highest level for active US crude oil futures since November 16. The fall in US crude oil inventories left inventories 3.0% above their five-year average for las week ended February 22—a factor that could push US crude oil prices near the psychological important level of $60. In the previous week, inventories were 6% above their five-year average.

The EIA reported a decline of 1.9 MMbbls in gasoline inventories, compared to a Reuters poll that estimated a fall of ~1.7 MMbbls. With that decline, gasoline inventories are 3% above their five-year average for the week ended February 22— one percentage point less than the previous week.

The graph above shows the inventories spread for US crude oil and gasoline. The inventories spread indicates the difference between inventories and their five-year average.

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Oil prices and US equity indexes

US equity indexes such as the S&P 500 Index (SPY), the Dow Jones Industrial Average Index (DIA), and the S&P Mid-Cap 400 (IVOO) can be influenced by changes in oil prices. The Energy Select Sector SPDR ETF (XLE), which includes energy stocks that are sensitive to oil, can also react to any changes in oil prices. Moreover, upstream stocks such as ConocoPhillips(COP) and Chesapeake Energy (CHK) will also be sensitive to any changes in oil prices.

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