The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, have traded modestly higher over the past week, but one important price level could be a challenge for oil futures to clear.
Some oil traders believe 2017 will be fertile ground for an oil rally. While production has declined in the U.S., recently rebounding oil prices are encouraging exploration and production companies to revisit spending plans with some increasing capital expenditures.
However, some market observers believe the $60 per barrel level will be a tough mountain to climb for oil futures.
“Crude oil and other liquids inventories grew by 2.0 million barrels per day in the fourth quarter of 2016, the US Energy Information Administration (EIA) estimates in its global oil forecast published on Wednesday, stating that oil prices should remain below US$60 through the end of 2018,” according to OilPrice.com.