On Wednesday, several reports that the American Petroleum Institute had said USA oil inventories fell by 1.1 million barrels last week gave the commodity another jolt. The Energy information Administration (EIA) reported US commercial crude inventories rose by 2 million barrels to a total of 540.6 million barrels in the previous week.
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The figures are said to have fallen to as low as 1.6 million barrels per day, following incessant pipelines vandalism in the country.
Fortune released an article today entitled Here’s Why Oil Prices Just Hit a 2016 High …with West Texas Intermediate (WTI) closing at $45.33 and Brent Crude closing at $47.34 per barrel according to Bloomberg Energy today, I was also wondering the same thing.
Oil markets jumped almost 2 percent on Thursday, scaling 2016 highs for a third straight day as a weaker dollar had investors shrugging off record high USA crude inventories and relentless pumping by major producers.
Brent Crude hit a high of 47.05 dollars, but is now down 0.55 percent at 46.92 dollars per barrel.
Meanwhile, The World Bank said that demand will pick up this year along with a further fall in USA output in the second half of 2016, boosting its forecast for oil prices this year.
Some traders said crude’s rally was overdone, and warned that higher prices could encourage more production which would aggravate a global supply glut.
The Federal Reserve’s policy-setting committee meets on Wednesday but is not expected to announce any change in rates, leaving traders to scour the post-meeting statement for any clues on the outlook.
Additionally, if US shale drillers decide to send rigs back into the oil patch, some drilled but uncompleted shale wells could begin to come online, adding new supply to the already flush market.
First out of the gates with a report in a first quarter that saw crude oil prices drop below $30 per barrel, BP said it was trimming its spending target toward the low end of its estimate between $17 billion and $19 billion for the year.
A weak dollar has also provided support as it makes crude cheaper for customers using other currencies. Front-month Brent crude was trading at $44.80 per barrel at 0710 GMT, down 31 cents from its last settlement.
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“We’re seeing more capital spending cuts, which will continue to reduce supply while USA demand is rising”.
