U.S. Markets open in 3 hrs 32 mins

President Trump Might End Oil’s Gain

Robert Scott
President Trump Might End Oil’s Gain

What's Impacting Your Energy Portfolio Gain?## Oil pricesOn January 10, US crude oil February futures rose 0.4% and settled at $52.59 per barrel. The US-China trade talks this week might have supported oil prices. In the trailing week, US crude oil prices rose 11.7% with a fall in the implied volatility, which we’ll discuss in Part 4 of this series. However, the Energy Select Sector SPDR ETF (XLE) rose 0.3% on January 10. The S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 0.5%. In Part 3 of this series, we’ll analyze US crude oil’s relationship with these equity indexes. Integrated energy stocks like ExxonMobil (XOM) and Chevron (CVX) are also sensitive to oil prices.## US government shutdownAt 6:50 AM EST, US crude oil prices rose by 32 cents. However, if the US government shutdown continues, it might wash away the gain in oil prices from the trade talks. President Trump might consider declaring an emergency if the shutdown doesn’t end. Declaring an emergency might spook equity markets and oil’s gains. US crude oil prices are near the price forecast for 2019.## Demand concernsConcerns about the demand side could be another problem for oil prices. On January 10, the US Ten-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity yield spread was 11 basis points above its multiyear low of 14 basis points on January 3—a concern for oil prices going forward. If the spread enters the negative territory, the economy might enter a recession in the next year.Next, we’ll discuss the key drivers for energy ETFs.Continue to Next PartBrowse this series on Market Realist: * Part 2 - Wall Street’s Sentiments Boosted Energy ETFs * Part 3 - Broader Market Might Have Pushed Oil Higher * Part 4 - Where US Crude Oil Might Head Next Week