Here’s the deal! oil prices traded close to $50-level this week before the fed minutes sent fears over the possibility of a June rate hike and as the market digest oil-related events and data.
Oil started the week with gains, hitting 7-month highs as the market was perceived to shift into deficit in May due to falling production as the disruption to supplies in Nigeria added to the sentiment.After the militant attacks, the production output of the largest oil producer in Africa declined to 1.65 million barrels per day.
Last week, U.S. oil futures traded higher as the crude stockpiles drop and the U.S. shale production fall. Before the market close on Monday, Brent futures climbed to a session peak of $49.38 per barrel near to $50 per barrel on November 4.
Meanwhile, it was spread on the market that Venezuela’s state-run oil company Petróleos de Venezuela (PDVSA) was dealing with $5 billion in debt payments in 2017. PDVSA confirmed that it will honor all debt commitments for this year and understand the need for a new restructuring soon. Despite the drop of oil prices for the past two years, the deficits of Venezuela increased as 95 percent of its total exports came from oil.
Oil extended its gains as the commodity received a bullish assessment of an American multinational investment banking firm and as the U.S. Energy Information Administration forecasted a decline of the shale output in June for the eighth month already. The bullish sentiment for oil was supported as well by the reductions of Canadian crude after the wildfire in Canada’s oil sand’s hub.Consequently, the Canadian oil output went down near to 1 million barrels per day.
According to reports, after the huge wildfire at the oil sands hub of Fort McMurray, firefighters were forced to focus on protecting the oil sand facilities north of the city. A representative of the Alberta Emergency Management Agency said that the urgency they were looking at was with regards to the oil gas infrastructure.During this time, crude oil futures was trading near to 2016 highs and rallied 34 cents to $48.8 per barrel, the highest since October.
The American Petroleum reported that U.S. oil inventories dropped by 1.2 million barrels the previous week while the gasoline inventories was down by 1.9 million barrels. Additionally, crude stocks at the Cushing Oklahama delivery hub for WTI increased 508,000 barrels while the distillate inventories lost 2.0 million barrels. The report of the industry group strengthened the position of oil prices, which was near to session highs.
In the middle of the week, the U.S. Energy Information Administration surprised the market with strong crude oil inventories in the week ended May. The EIA reported that the total U.S. crude oil inventories were historically on high levels for this time of the year as it rose to 541.3 million barrels. Further, the distillate stockpiles dropped as well as the gasoline inventories.
After the Federal Reserve showed strong signals of a rate hike in June, the commodities including gold and oil inched down. WTI crude for June delivery lost 1.43 percent while the Brent futures as down by 1.68 percent after the trading session.
Oil futures remained under pressure before the week ends since the expected rate hike weighed on the commodity. However, as the market shifted the focus on the U.S. rig count data, crude oil edged up in Asia. Thus, considering the factors which supported the rally of oil futures, the commodity would likely to remain on the bullish trend and it may touch $50 soon.