Crude Oil Prices Rebound After Christmas Eve Rout

Share This Article
December 26, 2018 11:52am NYSE:USO

Oil Prices

From Gillian Rich: Crude oil prices were up Wednesday after plunging Monday even as Japan slipped to join stock markets in China and Germany, as well as the S&P 500 index and Nasdaq composite, in bear market territory.

U.S. crude oil prices jumped 3.5% to $44.04 per barrel after plunging 6.7% on Christmas Eve. Brent crude oil prices rose 2.2% to $51.61 after undercutting $50 overnight.

Also supporting crude oil prices: The U.S. stock market opened higher, though energy stocks weren’t particularly strong.

Exxon Mobil (XOM) were up 0.1% on the stock market today. Fellow Dow Jones energy giant Chevron (CVX) climbed 0.5%. BP (BP) advanced 0.25%. Royal Dutch Shell (RDSA) climbed 0.25%. EOG Resources (EOG), a big U.S. shale producer, was flat.

One reason for the relatively muted gains for Exxon stock and other energy names could be that crude oil prices extended losses after U.S. stock markets closed at 1 p.m. ET on Christmas Eve.

Igor Sechin, head of Russia’s Rosneft and a close ally of President Vladimir Putin, said Wednesday that the drop in global crude oil prices was due to the Federal Reserve raising interest rates last week.

Crude Oil Prices Amid Global Economic Weakness

“The shock value of the price drop and the lack of confidence about the global economy will cause a sharp pullback in energy investment,”  Phil Flynn, senior market analyst at Price Futures Group, wrote in his daily Energy Report.

He expects big capital spending cuts in 2019.

Oil companies “will have no choice even if they believe that this price crash is overdone, because the shareholders will not take too kindly to them if they are wrong.”

But if oil companies curb activity and the economy doesn’t perform as badly as the stock market suggests, then Flynn warns that oil prices could spike in 2019.

OPEC Crude Oil Production Quotas

Earlier this month, OPEC and its allies led by Russia, agreed to curb crude oil production by 1.2 million barrels per day starting in January. But the lack of detail raised concerns that participants could fudge any commitments to cut.

Last week, OPEC Secretary-General Mohammad Barkindo reportedly wrote to members urging them to release their quotas in an effort to support crude oil prices.

But the release seems to be delayed.

The letter also states that countries will reduce production by 3.02% to meet the 1.2 million-barrel-per-day cut, up from the 2.5% agreed on during the meeting.

The United States Oil Fund LP (USO) was trading at $9.47 per share on Wednesday morning, up $0.18 (+1.94%). Year-to-date, USO has declined -21.15%, versus a -11.22% rise in the benchmark S&P 500 index during the same period.

USO currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 108 ETFs in the Commodity ETFs category.

This article is brought to you courtesy of Investor’s Business Daily.

9 "Must Own" Growth Stocks For 2019

Read Next

Get Free Updates

Join over 50,000 investors who get the latest news from!

Most Popular

Explore More from

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again! respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories