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Why Oil’s Rise Might Be Unstoppable

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US crude oil

On March 18, US crude oil prices rose 1% and settled at $59.38 per barrel—the highest closing level for active US crude oil futures since November 12. The oil prices likely rose due to the falling global oil supply. In the trailing week, US crude oil prices rose 4%. However,  concerns about global economic growth might come into play amid higher oil prices.

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Oil’s rise might be unstoppable

At 6:43 AM EST on March 19, US crude oil prices were 28 cents more than the last closing level. The bullishness from March 18 might continue in today’s trade. Moreover, a news report suggested that Venezuela has stopped its oil exports to India. India was Venezuela’s most important oil trading partner after the US before the sanctions were imposed.

The oil rig count is at an 11-month low, which could be crucial for oil’s upside. US crude oil production fell slightly in the week ending March 8. The U.S. Energy Information Administration is expected to report a fall in oil inventories for last week, which might be important for oil prices.

On March 18, US crude oil active futures were 4.5%, 9.6%, and 8.7% above their 20-day, 50-day, and 100-day moving averages, respectively. US crude oil prices above these key moving averages indicates bullishness. On the upside, the closing level of $60.45 will likely be important for US crude oil prices until March 22.

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.

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