For the past few weeks, oil has struggled to move past the $55 mark, see-sawing between $52-$54 a barrel. 2017 has been marked by low volatility, while the commodity is searching for a driver that will push it past the resistance level of $55.
Caught in a range trading momentum, OPEC’s efforts seem to have reached a plateau and the price of oil had found an equilibrium.
OPEC and Non-OPEC members planned to cut output by 1.8 million barrels a day to help curtail supply, to in-turn stimulate demand. The flush of supply that has undercut prices, depressing the market for over two years.
Recent data has shown a stark drop of 884K barrels in US inventories in the week ending on the 17th of February. Compared with forecasts, which suggested that there would be an increase of 3.5 barrels.
Energy Information Administration (EIA) reports showed an increase of .56 million barrels in the week ending 17th of February. The reading shows that there are almost 9% more inventories than there was a year ago, the news supports investor’s concern that production is in excess.