Brent crude oil price grew to more than $50 per Barrel on Thursday due to recent fall in the United States crude stocks encouraged those who expect tightening.
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Recently on ICE Futures in London, July Brent crude went up to $50.03 per barrel, which is maximum level in 6 months. Light sweet crude futures for July were sold fot $49.83 per barrel.
Prices for oil were in trouble for almost two years. But lately problems with supplies and increasing demand from India and China have added hopefulness to market members. Since oil prices reached their minimum level in 12 years in February, they rose by 80 %.
Another good news was that crude stocks in the U.S. declined more than expected. According to the U.S. Energy Information Administration announced that last week crude stockpiles decreased by 4.2 million barrels, comparing to 2.5 million expected by analysts.
Vyanee Lai, an energy analyst at National Australia Bank, noted that production in the U.S. is falling changing the fundamentals of the U.S. industry.
Goldman Sachs, which previously forecasted that oil prices will drop to $20 before restoring, now suggests that the market experienced a deficit in May.
Falling prices proved energy corporations to decrease their production to protect cash flow. The International Energy Agency predicts the huge drop in supplies in the second half of 2016 despite high demand.
In contrary, some experts suggest that this rally is going to be short-term as there’s no demand enough to compensate excess supply while the OPEC are ready to increase production.
Also, this week Iran again refused to freeze their oil output.
According to Rokneddin Javadi, Deputy Oil Minister, the Oil Ministry and the government didn’t make any plan for the National Iranian Oil Company to cut the growth in oil production and exports.
Iran’s oil exports are already 2 million barrels a day and it’s believed to grow to 2.2 million bpd in July.
At the same time, some supply issues are ending. For example, Canada has seen a reduction by 1 million barrels a day due to wildfires, but now the production has been restored.
According to Société Générale’s recent note, news about production increase can recoup the bullish price influence of U.S. crude oil imports from Canada.
Analytical review at Alpari