Crude Oil’s (USO) Price Movement Through The Week Ended May 22

Crude oil prices closed in the red during the week ended May 22, on the back of a strong US dollar and a slowdown in rig closures in the US. Investors also booked profits during yesterday’s trade following two days of gains, driving the prices downward.

During the week, US crude oil prices, as measured by the benchmark West Texas Intermediate (WTI) Crude Oil front month futures, traded up by a mere 0.05%. On the other hand, Brent Crude Oil front month futures, the benchmark for global crude oil prices, traded down by a substantial 2.16%. WTI and Brent futures last traded at $59.73 and $65.37 per barrel, respectively.

Following the price movement in the crude oil futures contracts, the United States Oil Fund LP (ETF) (NYSEARCA:USO) lost 1.32% of its value, while the United States Brent Oil Fund, LP (NYSEARCA:BNO) lost 1.99%. The exchange traded funds (ETF) had booked gains of 0.49% and 0.96% in the earlier week, respectively.

Over the course of the week ended May 22, crude oil prices and other commodity futures had been under pressure from the strength in the US dollar, with a strong greenback making the dollar-denominated futures more expensive for foreign investors. During the week, the US dollar gained 3.22% of its value against a basket of currencies.

The rally in the greenback was driven by positive US housing data and Consumer Price Index (CPI) released for the month of April. Moreover, the weakness in the euro had added to gains in the US dollar, with the euro losing 3.83% of its value against the US dollar during the week. At the end of the week, one euro would yield investors $1.1.

Data from the US Census Bureau, released on Tuesday, showed that 1.13 million new houses and building were constructed during the month of April, compared to analysts’ estimates of 1.02 million. During April, 1.14 million building permits were issued, the data showed, while analysts had estimated 1.06 million permits to be issued during the week.

On Friday, the Department of Labor Statistics reported that the CPI, excluding Food and Energy, showed a year-over-year (YoY) growth of 1.8% during the month of April. Analysts polled by Bloomberg had called for a YoY increase of 1.7%. The all-inclusive CPI showed a slump of 0.2% during the month of April, in line with expectations of analysts polled by Bloomberg.

During Wednesday and Thursday’s trading sessions, crude oil prices had gained substantially on the back of favorable inventory data from the DoE’s Energy Information Administration (EIA) and unrest in the Middle East. WTI futures contracts gained 4.71% between Wednesday and Thursday, while Brent futures gained 3.94%.

The EIA reported on Wednesday that the inventory levels in the country had fallen by 2.67 million barrels during the week ended May 15, while analysts were expecting a draw of 730,000 barrels. The EIA also reported that during the week the US pumped out 9.26 million barrels of crude oil per day, lower than the earlier week’s production rate of 9.37 million barrels per day, erasing worries that supply of the commodity from the US would add to the oversupplied market.

During Friday’s trading session, WTI futures lost 1.65% of their value, last trading at $59.72 per barrel. Brent had lost 1.76% of their value, ending the session at $65.37 per barrel. Consequently, the United States Oil Fund, and the United States Brent Oil Fund closed the trading session down by 1.22% and 1.46%, respectively.

The crude oil futures closed the trading session on Friday in the red as investors booked profits from the earlier two trading sessions. Moreover, data from Baker Hughes Incorporated (NYSE:BHI) showed that the rig closures in the US had slowed down, with the rig count declining by 3 in the week ended May 22.

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