Price of the Brent crude oil at the London ICE (InterContinental Exchange Futures) rose $1.40 to trade at $40.50.
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On the New York Stock Exchange NYMEX (New York Mercantile Exchange) cost of the US Light crude oil increased $2.62 to stand at $38.88.
That in turn has injected new life into this aging, seven-year-old bull market, pushing the major US and Canadian equity indexes to the highest levels of the year as of Wednesday’s close.
West Texas Intermediate (WTI) crude oil reversed two days of losses Wednesday morning following the announcement that oil-producing countries, including OPEC members and Russian Federation, plan to meet next month to set production limits. Even if US oil production continues to decline, the greater than 500 million barrels of oil inventories – a record high – need to start declining in a substantial way before the oil markets will see a sustained rally.
The U.S. dollar weakened following a statement by the Federal Reserve on Wednesday that undermined expectations of a rise in interest rates by June. API estimated a 1.5 million barrel build in inventories for the week. That will ultimately determine US production and future prices.
By 10:55 a.m. EDT (1455 GMT), U.S. futures were up 3.7 percent at $37.71 per barrel.
WTI crude oil for April was up 73 cents at $39.19 a barrel, approaching its highest since November.
Analysts had forecast a build of 3.2m barrels.
“Unfortunately Royal Dutch Shell (LON:RDSA) is not on track to fully benefit from the recovery in oil prices as investors are showing little enthusiasm about letting control of the biggest U.S. refinery go to Saudi Aramco after an 18-year partnership”, she adds. “They fell again during previous year and we really noticed those changes at the pumps”.
The pact “put a floor under the oil price”, said the Qatari oil ministry.
A year or two from now, most analysts expect prices to be higher – perhaps significantly higher – than they are currently.
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The EIA created a profile of oil production in the United States by utilizing well completion and production data from IHS Global Insight and DrillingInfo. Firms as historically bullish as Goldman Sachs Group Inc. said oil prices could fall below $20 a barrel. Production has stagnated in recent months to around 9.1 million barrels a day, down from a peak at 9.7 million last April.
