The price of oil continues to rise. What is the reason at the moment? Crude oil inventories in the USA moved the oil market on Tuesday evening and yesterday afternoon! The official inventories of the US Energy Agency (EIA) fell by 12.8 million barrels yesterday. This is the strongest decline in three years!
Oil price scrapes to 60 dollar mark
Look at yesterday’s chart in the WTI oil price. As inventories were reported, WTI shot up from 59.24 to 59.90 dollars. So the $60 mark was scratched (chart since June 17th). So far, the market has been unable to maintain the level and the WTI oil price fell back to around 59 dollars. Is this a setback for the bulls? Not really. Because please bear in mind that the API inventories reported Tuesday evening had already anticipated the strong official rise in inventories. Just before the API data, the oil price was 57.80 dollars. So now we’re still $1.20 higher thanks to lower inventories!
But only inventories alone are not currently responsible for the high oil price. Other details are also helping the bulls at the moment. In the last two weeks the production volume in the USA has dropped from 12.3 to 12.1 million barrels. That of course helps. And it is also important that the energy authority EIA announced yesterday that US exports of crude oil have reached an all-time high. Overall, the US was a net oil exporter of 676,000 barrels last week. An incredibly bullish signal for the oil price! Because while US production is falling, exports are rising. Thus the supply quantity in the USA is declining, which is naturally in the long run readable in the sinking inventories.
Not much noticed in Europe, but even more in the USA: Philadelphia is home to the largest oil refinery on the east coast (processing 335,000 barrels per day). It was apparently irreparably damaged by a fire last week. 1,000 employees are now to be laid off, and the owner, Philadelphia Energy Solutions, is reportedly planning to sell the plant, which the operator has now announced will probably be out of operation for a long, very long time. The shortage of supply on the east coast is thus intensified even more!
All eyes on G20 and OPEC
The Iran crisis is currently at rest. But now the G20 summit in Japan is due to take place next weekend. Is there really anything left pending for an oil price movement? Questionable! But on Monday OPEC will meet. Then on Tuesday it will meet with its allies, especially Russia. It is quite likely (if by no means certain) that the production cuts, which are now coming to an end, will be extended until the end of the year. If not, where could the oil price go? Puhhhh, good question!