OPEC’s Decision and the Stronger Dollar Pressured Crude Oil Prices
Crude oil prices
On December 4, 2015, WTI (West Texas Intermediate) crude oil prices closed at $39.97 per barrel. WTI prices were 4.2% lower than the WTI prices for the week ending November 27, 2015. On December 4, Brent crude oil prices closed at $43 per barrel—4.1% lower than Brent crude prices at $44.86 per barrel on November 27, 2015.
Crude oil prices’ weekly recap
Between Friday, November 27, and Monday, November 30, WTI crude oil prices fell slightly by ~0.14%. The prices settled at $41.65 per barrel. Brent fell by ~0.55%. It settled at ~$44.61 per barrel.
On Tuesday, December 1, WTI prices recovered slightly. It settled at $41.85 per barrel. Brent crude oil fell slightly. It settled at $44.44 per barrel.
Crude oil prices fell due to an estimated higher OPEC (Organization of the Petroleum Exporting Countries) output for November. The US government data also showed that there wasn’t a significant reduction in the shale oil output in September. This was also one of the negative factors.
On Wednesday, December 2, WTI crude oil prices fell by 4.6%. It settled at $39.94 per barrel. Brent crude oil prices fell by 4.4%. It settled at $42.49 per barrel. Crude oil prices fell after the bearish inventory report from the EIA (U.S. Energy Information Administration). The report showed a more-than-expected rise in the crude oil inventories of 1.2 MMbbls (million barrels).
On Thursday, December 3, WTI and Brent crude oil prices closed at $41.08 per barrel and $43.84 per barrel, respectively. Crude oil prices closed higher compared to the previous day due to news that Saudi Arabia will propose a deal to balance the crude oil markets.
On Friday, December 4, WTI and Brent crude oil prices closed lower at $39.97 per barrel and $43 per barrel, respectively. Crude oil prices fell because the OPEC members don’t intend to take measures to curb the supply. This caused more concern about the glut in the crude oil markets.
Pressure on crude oil producers
Lower crude oil prices (USO) are impacting crude oil producers. The lower prices are due to oversupply in the market. The recent OPEC meeting didn’t conveyed any production cuts heading into 2016. This could adversely impact crude oil producers’ revenue like Cimarex Energy (XEC), Murphy Oil (MUR), Oasis Petroleum (OAS), Diamondback Energy (FANG), Apache (APA), and Hess (HES).
Oasis Petroleum accounts for 1.7% of the Oil & Gas Exploration & Production ETF (XOP).
In the next part of this series, we’ll discuss OPEC’s crude oil and the WTI-Brent spread.