US crude oil
On March 4, US crude oil prices rose 1.4% and settled at $56.59 per barrel. The rise in oil prices was likely due to the falling global oil supply and optimism regarding trade talks.
Is it a bear trap for oil traders?
At 6:42 AM EST on March 5, US crude oil prices were almost on par with their last closing level. Earlier, US crude oil prices were down as much as 50 cents from the last closing level. The fall could be because China lowered its GDP growth rate target 6%–6.5% for the current year.
However, the oil rig count at almost an 11-month low could be crucial for oil’s upside. As we discussed earlier, the global oil supply is falling sharply. The only roadblock to oil’s rise is US crude oil production, which has shown signs of a slowdown.
Apart from US crude oil production, the EIA inventory data might boost oil prices this week. Any retreat in oil prices could be a buying opportunity. The short positions on oil might not be rewarded.
On March 4, US crude oil active futures rose 1% above their 100-day moving average. In the last few trading sessions, US crude oil prices were struggling near this key moving average. On the upside, the closing level of $59.41 would likely be important for US crude oil prices.
The S&P 500 Index (SPY), the Dow Jones Industrial Average (DIA), and the S&P Mid-Cap 400 (IVOO) might be impacted by any short-term changes in oil prices due to their exposure to the energy sector. Upstream energy stocks like ConocoPhillips (COP), Chesapeake Energy (CHK), and Occidental Petroleum (OXY) will likely be impacted by any changes in oil prices.