Why WTI and Brent Crude Oil Prices Crossed Paths
WTI and Brent crude oil prices fell on a weekly basis
On December 31, WTI (West Texas Intermediate) crude oil prices closed at $37.04 per barrel, which was 1.2% higher than the previous day’s close but 2.8% lower than the closing price of $38.1 per barrel on December 24. On December 31, Brent crude oil prices closed at $37.28, which was 1.6% lower than the closing price of $37.89 per barrel on December 24, 2015.
Weekly recap
On December 24, WTI crude oil prices (USO) closed at $38.10 per barrel—a rise of 9% on a weekly basis. Oversupply put pressure on global crude oil markets, but tightening US crude oil supply due to the removal of the export ban strengthened WTI crude oil prices.
On December 28, WTI and Brent crude oil prices fell more than 3%, as the world fourth largest crude oil buyer, Japan, reported that its crude oil consumption is at a 46-year low. This renewed concerns about oversupply, which impacted crude oil prices.
On December 29, crude oil prices rose over 2%, as forecasts showed that the United States may get some cold winter temperatures in the coming weeks. Analysts’ expectations of a drop in the crude oil inventories also contributed to the rise in crude oil prices.
On December 30, crude oil prices fell over 3%, as the EIA (U.S Energy Information Administration) report showed a rise of 2.6 MMbbls (million barrels) in the crude oil inventories for the week ending December 25.
On December 31, crude oil prices rose 1.2% to close the year at $37.04 per barrel. The fall in the US rig count by two rigs pushed the WTI crude oil prices to end this year with a gain.
Impact
WTI crude oil prices fell nearly 3% last week. The fall in prices makes US oil producers sell their crude oil at lower prices, which impacts the revenues of crude oil producers such as Apache (APA), Cimarex Energy (XEC), Diamondback Energy (FANG), Hess (HES), and Murphy Oil (MUR).
Cimarex Energy (XEC) accounts for 0.86% of the Energy Select Sector SPDR Fund (XLE).
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