Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0779
    -0.0014 (-0.13%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2620
    -0.0002 (-0.02%)
     
  • USD/JPY

    151.4130
    +0.0410 (+0.03%)
     
  • Bitcoin USD

    70,449.71
    +115.97 (+0.16%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,369.44
    +201.37 (+0.50%)
     

Oil ETFs Could be Rangebound for a While

This article was originally published on ETFTrends.com.

The United States Oil Fund (USO) , which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (BNO) , which tracks Brent crude oil futures, rallied Wednesday amid some encouraging inventories data, but some market observers expect oil prices to be rangebound over the near term.

Oil prices strengthened after the American Petroleum Institute revealed late Tuesday that U.S. crude oil stockpiles declined by 5.2 million barrels for the week ended August 17, the Wall Street Journal reports.

The Energy Information Administration will release its official numbers Wednesday and could show a 2 million barrel drawdown in crude stocks, according to oil analysts.

“Additional bearish concerns could soon come from the supply side, a notable turnaround as the supply picture has been a bullish factor for much of this year. Market analysts grew concerned about a supply crunch a few months ago, but the outlook is now shaping up to be one of, if not abundance, then maybe 'adequate' supply,” reports OilPrice.com.

Oil Supply Factors to Consider

Other factors contributing to oil’s surge this year was the U.S. exploring the possibility of tapping into their emergency reserves to stymie disruptions in oil supply, notably the slashing of Iranian oil imports.

Related: A Core Midstream Energy ETN That T. Boone Pickens Would Be Proud Of

Since 2016, OPEC and a number of other major oil prices like Russia have been in a concerted effort to cut 2% of the global crude supply in an attempt to diminish the global supply glut and stabilize crude prices. Analysts now project the oil market could move into a deficit in the second part of 2018 and 2019 of 0.5 million barrels and later 0.3 million barrels per day as demand begins to outpace supply.

“The shale industry could face some infrastructure headwinds in the Permian, but so far that has not made a huge dent in production forecasts. In fact, U.S. shale companies are increasing spending this year,” reports OilPrice.com. “According to Rystad Energy, in the second quarter, a selection of 33 shale companies announced spending increases of a combined 8 percent relative to initial spending guidance, an additional $3.7 billion in spending.”

For more information on the energy sector, visit our energy category.

POPULAR ARTICLES FROM ETFTRENDS.COM

READ MORE AT ETFTRENDS.COM >

Advertisement