Crude Oil Prices Rose in April: Will the Bullish Momentum Continue?
Crude oil prices rose
WTI (West Texas Intermediate) crude oil futures contracts for June delivery fell slightly by 0.2% and closed at $45.92 per barrel on April 29, 2016. Brent crude oil futures also fell marginally by 0.02% to $48.13 per barrel on the same day. The depreciating US Dollar Index limited the downside for crude oil prices. ETFs like the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil ETF (UCO) rose by 0.71% and 1.2%, respectively, on April 29, 2016.
US dollar index
The US Dollar Index depreciated by 0.3% on April 29, 2016. It depreciated by 1.6% in April 2016. So far, it’s down by ~6% in 2016. The depreciating US dollar makes crude oil cheaper for oil importing countries. The US dollar depreciated due to the dovish comments by the Fed. The PowerShares DB US Dollar Index Bullish ETF (UUP) tracks the performance of the US dollar. USO tracks the performance of US crude oil futures contracts. The above graph shows the inverse relationship between the US dollar and crude oil. Secondly, the slowing US crude oil output also limited the downside on US crude oil prices.
Crude oil prices hit 2016 high on April 28, 2016
WTI and Brent crude oil prices hit 2016 highs on April 28, 2016. US benchmark WTI crude oil prices gained 20% in April—compared to the previous month. The global benchmark Brent crude oil prices also gained 21% for the same period. They have gained almost 70% since the lows in February 2016. For the latest on the bullish catalysts, read What Are the Bullish Catalysts for Crude Oil Prices This Week? and Slower Non-OPEC Production and Other Bullish Forces for Crude Oil.
Impact on stocks and ETFs
The uptick in crude oil prices benefits oil producers like Cobalt International Energy (CIE), Denbury Resources (DNR), and Energy XXI (EXXI). Crude oil prices also influence ETFs and ETNs like the iShares US Oil Equipment & Services ETF (IEZ), the ProShares Ultra Oil & Gas ETF (DIG), and the Fidelity MSCI Energy (FENY).
This series focuses on Cushing crude oil stocks, the US crude oil rig count, the Organization of the Petroleum Exporting Countries crude oil production, Iraq’s crude oil production, the U.S. Commodity Futures Trading Commission’s “Commitment of Traders” report, and the crude oil price forecast.
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