Crude oil price rise on Tuesday came across with speculation that the future supply may be hit gradually, especially in the United States. At Record price, Brent crude oil went up by 20 cents at $51.86 a barrel by 0930 GMT. U.S. light crude was 15 cents higher at $47.52.
Market analyst, Fawad Razaqzada at futures brokerage Forex.com said that the US crude oil stocks have been falling consistently in recent weeks.
“If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia,” Razaqzada added
A 13% fall has been recorded in the US commercial crude inventories from their March figures, to 466.5 million barrels.
In addition, Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back around 1.8 million bpd of output between January this year and March 2018 in order to tighten supplies which would eventually lead to rising prices.
Whereas on the contrary, oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.
With a record crude production in US breaking 9.5 million barrels per day (bpd), its highest since July 2015. Some analysts say that output growth may slow down as energy corporations cut a number of rigs drilling for oil. However, the rise in production has been relentless with increasing volumes from shale, significantly from the enormous Permian basin in Texas and New Mexico.
“With U.S. shale oil production proving more than resilient, the autumn period presents a lot of downside risk to oil prices,” Harry Tchilinguirian, chief oil market strategist at French bank BNP Paribas, told Reuters Global Oil Forum.
To see if the recent downward trend in US stocks continues; the weekly data on US inventories have to be tracked which starts later on Tuesday. According to a Reuters poll, U.S. crude inventories are expected to fall for the eighth week in a row and drop by 3.4 million barrels
Hans van Cleef, senior energy economist at ABN AMRO Bank NV in Amsterdam said, Another decline in US crude stocks may lead to somewhat higher prices again, though the upside may be limited – especially if U.S. crude production ticks higher again.
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