US Dollar and Inventory Data Impact the Crude Oil Market
Price range
October WTI (West Texas Intermediate) crude oil futures contracts fell by 4% on Thursday, September 9, 2015. They rose by 4% in yesterday’s trade. For the crude oil market, the roller coaster ride in oil crude oil prices isn’t new. Prices have been showing a downward trending channel over the past few days. The tug-of-war between the crude oil inventory and refined products inventory is driving crude oil prices.
Support and resistance
The rising demand for gasoline and slowing US production could push crude oil prices higher. The next resistance for crude oil prices is seen at $50 per barrel. Prices tested this level in August 2015. In contrast, mammoth production from Russia and Saudi Arabia could drag crude oil prices lower. The nearest support for crude oil prices is seen at $38 per barrel. Prices tested this level in August 2015.
The long-term oversupply concerns could keep crude oil prices lower, according to Goldman Sachs’ estimates. Societe Generale projects that WTI (West Texas Intermediate) prices could average around $49.40 per barrel in 2016. The EIA (U.S. Energy Information Administration) projects that WTI prices could average $49.23 per barrel in 2015 and $53.57 per barrel in 2016.
The recent rise in crude oil prices could benefit oil and gas producers’ like EOG Resources (EOG), Pioneer Natural Resources (PXD), and Noble Energy (NBL). Combined, they account for 10.40% of the Energy Select Sector SPDR ETF (XLE). These companies’ crude oil production mix is more than 41% of their production portfolio.
The rise in crude oil prices also benefits ETFs like the Velocity Shares 3X Long Crude ETN (UWTI). In contrast, ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO) benefit from lower crude oil prices.
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