Canada’s economy has been hit hard by a rapid and deep decline in global oil prices that began in 2014, when crude prices were above US$100 a barrel.
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As crude prices push higher, a major US drilling rig contractor says demand for its equipment is finally picking up after a long oil bust that sidelined more than 1,500 rigs across the country.
U.S. dollar weakness is also a key factor in this week’s oil bounce.
Cieszynski said traders are encouraged by the U.S. Federal Reserve’s wait-and-see approach on interest rate hikes.
“Markets digested Yellen’s seemingly dovish comments, with risk appetite tentatively making a comeback”, the IG analyst Bernard Aw wrote in a note. Rebel attacks have brought oil output in Nigeria, once Africa’s largest crude producer, to a 20-year low. Capital Economics analysts recently projected that oil would retreat to $45 per barrel by the end of 2016. Oil traded near the highest close in more than 10 months as weekly United States industry data showed crude stockpiles declined, trimming a glut. Fix work on a key Nigerian oil pipeline operated by Royal Dutch Shell is underway, according to a person familiar with the situation.
Oil prices hit their highest in eight months on Tuesday, buoyed by the dollar nearing one-month lows and by falling Nigerian oil output after a spate of attacks on infrastructure. “Demand growth is moving the market closer to balance”.
U.S. benchmark West Texas Intermediate for July delivery advanced 87 cents to US$51.23 a barrel on the New York Mercantile Exchange. “This, in our opinion, should limit the gains in spot prices”. The contract rose 89 cents, or 1.8 per cent, to $51.44.
US crude stocks fell for the third consecutive week, sliding by 3.2 million barrels versus analysts’ expectations for a 2.7 million-barrel drawdown, government data showed.
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Further bolstering oil, market intelligence firm Genscape reported a drawdown of 1.08 million barrels at the Cushing, Oklahoma delivery point for WTI futures during the week to June 3, traders who saw the data said.
