26 Dec

Oil on a Bullish Note: Should Traders Be Careful?

WRITTEN BY Robert Scott FEATURED IN Commodities

US crude oil

From December 15–22, 2017, US crude oil (USO) (UCO) February futures rose 2%. On December 22, 2017, US crude oil February 2018 futures closed at $58.47 per barrel, just ~1% below the 2017 highest closing price.

Oil on a Bullish Note: Should Traders Be Careful?

For the week ended December 22, 2017, the oil rig count was 747, the same as the previous week. However, in the coming days, the oil rig count could move higher. Based on EIA (U.S. Energy Information Administration) weekly data, US crude oil production rose to its record high in the week ended December 15, 2017. Tax reforms could boost the rate at which US crude oil production could rise.

These factors are also important for the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA). These equity indexes’ energy constituents react to the ups and downs in oil prices. We’ll include a few more equity indexes in the next part of this series.

Natural gas

From December 15–22, 2017, natural gas February futures rose 0.9%. However, on December 22, natural gas futures settled at $2.66 per MMBtu (million British thermal unit), just 3.8% above the 2017 lowest closing price. Last week, oversupply concerns could have limited natural gas’s upside.

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