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Will Oil Prices Remain Range-Bound?

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US crude oil moved lower this week

On April 17, US crude oil June futures fell 0.5% and settled at $63.87 per barrel. Profit-booking and the small decline in the S&P 500 Index (SPY) might be behind the fall in oil prices, despite a decline in the US oil supply. In the trailing week, US crude oil active futures fell 1.2%.

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Will US crude oil prices remain range-bound?

At 6:11 AM EST on April 18, US crude oil active futures were at $64.74—13 cents below the previous close. On the upside, US crude oil active futures haven’t decisively closed above $64 in the past five trading sessions. On the downside, at $63, US crude oil active futures have a strong support zone.

The ongoing conflict in Libya and US sanctions on Iran and Venezuela increased the concerns about a supply deficit. If the oil rig count falls, it might help US crude oil to test $64 again. Last week, Russia hinted that along with Saudi Arabia, it might opt to increase oil production amid rising US oil exports. The possibility of higher production kept a lid on oil prices despite a higher GDP figure from China. Until Saudi Arabia makes its stance clear on the production cut, US crude oil prices might remain range-bound.

However, US crude oil prices above $60 could be a positive development for ConocoPhillips (COP), Chesapeake Energy (CHK), Denbury Resources (DNR), and other upstream stocks.

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