Crude oil-related ETFs staggered Tuesday, swaying between positive and negative gains, as Saudi Arabia said it was prepared to dump more oil into the global market.
On Tuesday, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, was up 0.4% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, dipped 0.1%. Meanwhile, WTI crude oil futures were 0.4% higher to $74.2 per barrel and Brent crude futures were up 0.2% to $77.5 per barrel.
Oil prices slipped earlier in the morning but ended higher during the half-trading day on the ongoing supply disruptions that lifted crude prices to multi-year highs. U.S. futures have strengthened on supply problems in Libya and at a Canadian facility that diminished available U.S. crude supply, the Wall Street Journal reports.
The lowered supply helped USO jump 12.9% over the past month and BNO add 1.6%.
‘Unexpected Chaos’ in Oil Market
“The force majeure [in Libya]and Canada added some unexpected chaos,” Mr. Tariq Zahir, managing member of Tyche Capital Advisors, told the WSJ. “We’re in a massively tight market in the short term.”
However, concerns over rising supply, notably out of the Organization of Petroleum Exporting Countries, put a damper on recent gains. On Tuesday, Saudi Arabia stated its willingness to use spare production capacity to raise global supply. President Donald Trump has already called on foreign producers to raise supply to help curb rising prices.
Related – Oil Price Prediction: Door Open to $80 Per Barrel
At a June meeting, the oil cartel and allies including Russia agreed to hike output, but oil prices continued to increase despite the announcement.
“Let’s see how fast this ramps up from Russia and from Saudi,” Zahir added. “If Saudi does come through and gets up to a 2 million barrel increase in production, then I think we can see prices come down.”
For more information on the energy sector, visit our energy category.