US crude oil
On February 4, US crude oil prices fell 1.3% and settled at $54.56 per barrel. On the same day, US crude oil active futures made an intraday high of $55.75—the highest level since November 21. Profit-booking could be a reason for the fall in oil prices. At 8:38 AM EST on February 5, US crude oil prices were at $53.90 per barrel. Crude oil prices might have trended lower due to a fall of 0.6% in US factory orders in November on a month-over-month basis. However, US crude oil should maintain the $54 level this week. A Reuters poll suggests a fall in the difference between oil inventories and their five-year average, which we’ll discuss in Part 3 of this series.
The S&P 500 Index (SPY), the Dow Jones Industrial Average (DIA), and the S&P Mid-Cap 400 (IVOO) might gain from any short-term rise in oil prices due to their exposure to the energy sector. Upstream energy stocks like ConocoPhillips (COP), EOG Resources (EOG), and Occidental Petroleum (OXY) will likely be impacted by any rise in oil prices.
If oil prices retreat, it could be a good opportunity for bulls. The prices might rise until the first half of 2019. In the first six months of 2019, US crude oil production growth might decelerate, which might have a negative impact on downstream stocks.
Important price points
At 6:29 AM EST on February 5, US crude oil futures were trading 6.7% and 13.8% below their 100-day and 200-day moving averages, respectively. At the same time, US crude oil prices were 4.9% and 8.8% above their 20-day and 50-day moving averages, respectively—an important support zone for oil prices. US crude oil’s price hovering above these short-term moving averages indicates short-term momentum in oil. On the upside, $56.19 could be an important level for crude oil until February 8.