Why WTI oil prices just rose above $104 per barrel
Why did oil, natural gas, and natural gas liquids prices rise? (Part 2 of 4)
WTI crude oil prices traded higher last week
Since April 18 was Good Friday and NYMEX closed on that day, the energy prices of the week will be the closing prices on Thursday, April 17. On Thursday, the price of the WTI crude front month contract closed at $104.30 per barrel, slightly higher than the $103.74 per barrel close the week prior. This was the highest price since March 3, when WTI traded at $104.92 per barrel. The rise in prices was partly because the market remains concerned about crude supply in the near future, as geopolitical tensions between Russia and Ukraine continued to deteriorate. Russia is a major oil exporter, and the market may have been pricing in the risk of some sanctions against Russia’s oil sector. Though the EIA reported the biggest one-week increase in crude inventories this week, which was a bearish signal for crude prices, the market weighed more on the geopolitical tensions. As a result, WTI crude prices finished slightly higher on the week.
WTI crude prices over the past year have remained relatively high and stable
For most of the past year, WTI crude oil has been range-bound between ~$85 per barrel and ~$110 per barrel. Higher crude prices generally have a positive effect on stocks in the energy sector. The graph below shows WTI crude oil price movements compared to the Energy Select Sector SPDR (XLE)—which tracks companies from the oil, gas, and consumable fuels industry and the energy equipment and services industries and EOG on a percentage change basis from January 2007 onward. The movements have been in the same direction for the past couple of years.
Crude oil prices are a major driver in the valuation of many energy investments. Oil prices affect the revenues of oil producers, and consequently the amount of money oil producers are incentivized to spend on oilfield services. WTI crude is a significant benchmark tracked by investors with domestic energy holdings in companies such as Chesapeake Energy (CHK), EOG Resources (EOG), Pioneer Natural Resources (PXD), and Range Resources (RRC). Plus, crude prices can have a significant effect on energy ETFs such as the Energy Select Sector SPDR (XLE).
Read on to the next part of this series to find out about important changes in natural gas prices.
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