Crude oil climbed higher this morning, posting a fifth day of gains. The commodity is up 1.66% at $52.55 per barrel.
The rally came after US President Trump launched missiles against Syria in response to the gas attack earlier this week which killed over 70 people.
The strike touched everything from commodities to currencies and stocks. The beneficiaries of the action were oil and safe-haven assets as investors moved towards defensive assets in the wake of the strike. Crude oil reached a one-month high today. However, the rally eased off as supply concerns came back into focus.
Oil has extended gains in the past two weeks as the grip of over-supply woes loosen its hold on investor’s sentiment.
Yet, US data shows that crude inventories are at record highs which poses to threaten bullish trades. On Wednesday, storages came in at 1.6 million barrels per day compared to a -0.1-million-barrel forecast.
Moreover, oil has been supported by an unexpected outage at an oil field in the Irish Sea which helped push up prices, earlier in the week. Additionally, North Korea’s missile launch early Wednesday morning supported oil prices.
There has been a grapple between which sentiment to follow: OPEC’s efforts to depress supply or the US oil drillers and defiant OPEC members who increase output.
US oil drillers have been more agile since the price of oil reached $50 per barrel. The price war’s plot has thickened since Trump openly advocated fracking, assuring oil investors that over-supply woes will soon be harder to ignore.
Meanwhile, Saudi Aramco is reeving up for its initial public offering in 2018. The world’s largest company, with an estimated worth of 2tn, will be privatised.
Saudi Arabia, the world’s leading oil producer, has sliced the price of light crude for Asian buyers for the next two months to help stimulate demand in an oversupplied market.
Conversely, the kingdom has pushed up the prices of the product for US consumers, for the same length of time. This looks like an effort to decrease US stockpiles to help inch up demand.