Energy ETFs Rise on Crude Oil Prices, Fall on Natural Gas Prices

Joel Anderson  |

Those ETFs tracking the price of crude oil jumped today as crude prices rebounded from lows yesterday that finished just over $102 a barrel. Prices rallied today, with contracts for November 13th delivery jumping over 1.75 percent to about $103.80 a barrel by the afternoon. This carried crude oil ETFs with it, with the United States Oil Fund ($USO) gaining over 2.1 percent, the iPath S&P GSCI Crude Oil Total Return (OIL) rose almost 2.25 percent, and the PowerShares DB Oil Fund ($DBO) jumped over 1.5 percent.

Several factors could have affected crude oil on Wednesday, with the biggest news item being the announcement from TransCanada (TRP) that the southern spur of the Keystone pipeline was nearing completion. The Canadian petroleum company said that the Gulf Coast section of the pipeline, which could carry as much as 700,000 barrels a day if completed, was about 95 percent finished.

Also acting on crude prices was news that crude oil stockpiles in Cushing, OK fell for a 13th straight week, a record stretch. Dropping another 59,000 barrels, stocks reached 32.8 million barrels, the lowest level since February of 2012. Many believe that a completed Keystone pipeline could continue to cut into that supply.

"This is going to add to the drain on Cushing quite a bit," said Again Capital’s John Kilduff in reference to the near-completed southern spur.

Still others saw today’s price-jump as a market correction after a lengthy slide in oil prices. With calming tensions over Syria, the threat of geopolitical supply disruptions has appeared lower and dropped prices for weeks.

Tariq Zahir of Tyche Capital Advisors said "we were due for this kind of a bounce after what we have seen."

Natural gas, meanwhile, moved sharply against oil, with contracts for November 13 delivery falling over 1.75 percent in value on Wednesday. This took popular natural gas ETFs down, with the United States Natural Gas Fund (UNG) off almost 1.75 percent and United States 12 Month Natural Gas (UNL) falling almost 2 percent. This comes amid news that a major storm continues to develop near the Gulf of Mexico. The storm isn’t predicted to disrupt supply, but profit-takers opted to sell on Wednesday just to be safe. Natural gas has already be losing ground as cooler fall weather means Americans are using less air-conditioning and, as a result, less natural gas.

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