These speculators raised their combined net long U.S. crude futures and options positions in NY and London by 819 contracts to 254,508 during the week to May 24, the data reported by the U.S. Commodity Futures Trading Commission (CFTC) showed.
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“The weekly oil rig count from Baker Hughes will be followed closely.and another big question of the day is if the trend is about to reverse as oil prices have regained some strength over the last months”, said Michael Poulsen, oil analyst at Global Risk Management.
Domestic heating oil suppliers have been feeling the effect, with average prices of domestic heating oil increasing 24% since February 2016 (see here).
West Texas Intermediate for July delivery was at $49.41 a barrel on the New York Mercantile Exchange, up 8 cents at 9:40am Hong Kong time.
Brent crude last Thursday topped $50 a barrel for the first time this year as production disruptions in Canada and Nigeria eased short-term concerns about abundant global supplies.
In addition, “OPEC will no doubt use the recent supply disruptions in Canada, the falling output in the U.S. and the firmer oil prices as reasons not to cut production”, said Fawad Razaqzada, market analyst at trading group City Index.
Meanwhile, in Canada Suncor Energy has restarted production which has been halted because of wildfires.
“There is probably a sliver of hope that OPEC producers will hammer out an agreement to support oil prices, be it to freeze production or otherwise”, said IG Asia analyst Bernard Aw. International Brent futures were at $49.36 a barrel, up 4 cents.
Dominick Chirichella, senior partner at New York’s Energy Management Institute, said US crude output could rise by an estimated 300,000 to 400,000 barrels per day as shale producers put drilled but uncompleted wells, or DUCs, into production.
The global benchmark, Brent rose as high as $50.35/Bbl, its highest price since early November, while USA crude futures hit $50.21/Bbl, highest since mid-October. Despite the expected rise in Canadian output, ANZ bank said that WTI price support “still lingers” after the large fall in USA oil inventories late last week by 4.2 million barrels to 537 million barrels due to strong demand. With our best price guarantee you’ll always be given the best price we have available in your area.
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The dollar was up against all major currencies as markets digested the news. WTI oil can move higher towards $65 per barrel while Brent can move higher towards $70. “To see it go back into the high $30s wouldn’t surprise me, but barring any kind of catastrophe with the USA economy or other underpinnings of the world economy, I think we’re on a recovery pace”.
