International Brent crude futures were trading at $49.10 per barrel at 0128…
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Oil headed for a second weekly advance as USA crude production continued to decline and wildfires in Canada expanded. “We suspect the nation’s recent issues could see this fall below 2 million bpd in May”, ANZ said.
Wall Street rallied on Friday, led by tech stocks on the back of Applied Materials’ profit forecast, ending a volatile week on a positive note. USA crude futures were down 63 cents, or 1.3 percent, at $47.56 a barrel.
The S&P is marginally positive for 2016.
Prices retreated slightly Friday as the dollar strengthened.
“The late sell-off we saw in the last half an hour of trading yesterday is being followed through this morning as hints from the Fed about a possible rate hike next month sent the dollar index soaring”, said Tamas Varga of oil broker PVM.
US West Texas Intermediate (WTI) crude futures traded at $48.59 a barrel, up 43 US cents day on day and within touching distance of a seven-month high of $48.95. The more-active July contract gained 40 cents to $49.07 at 9:40 a.m. London time.
Fluctuations in supply and demand play a key role in influencing the price of oil along with macro-economic and monetary policy actions that impact the affordability of it. Earlier in the week, oil approached a six month high, putting it comfortably above the 12-year lows reached in early January when overproduction coupled with concerns about potentially lower demand for oil from China drove prices down. It had fallen $1.55, or more than 3 percent, to $47.38 a barrel during the session.
“A growing contingency of market participants are of the view that the market is already in a rebalancing pattern and the current round of unscheduled production cuts are starting to accelerate the process”, he said.
In Nigeria, militant activity has cut oil exports to a more than 22-year low of under 1.4 million bpd.
“Prices are unlikely to rise too much as the specter of glut is still there”, he said. Some analysts believe that constricted supply – including a drop in USA shale production – will continue to put upward pressure on prices as demand continues to surprise to the upside.
Storing oil on ships can be profitable when prices for future delivery of crude are higher than in spot market, a term structure known as contango, as long as future prices are high enough to offset tanker charter costs.
Chances of joint action among OPEC and non-OPEC producers to balance an oversupplied market remained slim.
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Officials said Nigeria’s output had slumped to 1.4 million barrels per day from 2.2 million because of the unrest.
