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Energy Commodities: Last Week's Key Updates – Market Realist

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Weekly Energy Update: June 12 to June 16, 2017 PART 1 OF 7

By Robert Scott  | Jun 19, 2017 2:17 pm EDT

US crude oil prices fell for fourth consecutive week

On June 16, 2017, US crude oil (USO) (OIIL) August futures settled at $44.97 per barrel. Between June 9 and June 16, 2017, US crude oil August futures fell 2.4%. This was the fourth consecutive weekly drop. The global benchmark Brent crude oil (BNO) active futures fell 1.6% in the last week.

Energy Commodities: Last Week’s Key Updates

On June 14, 2017, US crude oil August futures fell 3.7% on account of bearish inventory data. On the same day, the EIA (US Energy Information Administration) reported a surprise build-up of 2.1 MMbbls (million barrels) in total motor gasoline, whereas crude oil inventories fell 1.7 MMbbls in the week ended June 9, 2017.

Gasoline inventories rose compared to market expectations of a fall of 0.46 MMbbls. US crude oil inventories fell less than the market’s expectation of a fall of 2.7 MMbbls.

Saudi Arabia could reduce its crude oil shipments to Asia and the US in July 2017. However, a rise in OPEC members’ crude oil production in May and forecasts of rising production in 2017 and 2018 could offset Saudi Arabia’s efforts to boost oil prices. Last week, the oil rig count rose by six. A rise in US domestic crude oil production is another bearish factor for oil prices.

Natural gas futures

Natural gas (UNG) active futures fell only 0.1% between June 9 and June 16, 2017. Last week, bullish inventory data helped support natural gas prices. On June 15, 2017, natural gas active futures rose 4.2% after the EIA reported a rise of 78 Bcf (billion cubic feet) in the natural gas inventory for the week ended on June 9, 2017. The rise was below the market expectation of a build-up of 88 Bcf. However, mild weather forecasts could force natural gas futures to retreat.

Last week, the natural gas rig count rose by only one. However, the upsurge in oil rig count could adversely impact natural gas prices.

Broader markets

From June 9 to June 16, the S&P 500 Index (SPY) rose 0.1%, while the Dow Jones Industrial Average (DIA) was up 0.5%. These equity indexes invest 6.6% and 6.4% of their holdings in the energy sector, respectively.

Energy Commodities: Last Week’s Key Updates

Oil prices and energy subsectors

Last week, major energy ETFs tracked oil’s fall. Below are the returns of these energy ETFs between June 9 and June 16, 2017.

  • The VanEck Vectors Oil Services ETF (OIH) fell 1.6%.
  • The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 2.9%.
  • The Alerian MLP ETF (AMLP) fell 2.2%.
  • The Energy Select Sector SPDR ETF (XLE) fell 0.2%.

The Energy Select Sector SPDR ETF (XLE) saw the smallest loss among the sector-based SPDR ETFs. The Industrial Select Sector SPDR ETF (XLI) rose 1.1% between June 9 and June 16, 2017. It was the biggest gainer among the sector-based SPDR ETFs.