Crude oil prices nudge towards $50 a barrel
For the first time in almost eight months, crude oil prices got closer to $50 yesterday, probably due to sharp fall in the United States’ inventories.
The American Petroleum Institute, on Tuesday, said that its data for last week showed a 5.1-million-barrel decrease in the U.S. crude supplies.
Also, recent supply disruptions in Canada, Nigeria, and Libya were said to be helping to support the upward price momentum, which helped to cut global oil supply by nearly four million barrels per day this month.
Specifically, the Brent crude futures went up by 59 cents at $49.20 a barrel by yesterday, while U.S. West Texas Intermediate (WTI) crude futures rose by 52 cents to $49.14 a barrel.
Crude oil prices have rallied nearly 80 per cent from 2016 low of $27.55 touched in January and is currently holding comfortably above $49.00 handle and hence, seem more likely to extend its near-term upward trajectory.
Meanwhile, the International Energy Agency (EIA) said that the spare capacity Organisation of Petroleum Exporting Countries (OPEC) would, by the third quarter of this year, fall to 1.25 million barrels a day, a level not seen since 2008, when oil prices peaked at $147 a barrel on tight supply and surging Chinese demand.
EIA estimated that this year, OPEC’s spare pumping capacity—the amount it can bring online within 30 days and sustain for at least 90, will be at its lowest level since 2008.
It said OPEC spare capacity would declined by more than 22 per cent in the current quarter, compared with the previous quarter.
It stated: “Crude prices firmed on the back of unscheduled supply outages in Nigeria, Ghana and Canada that exceeded 1.5 million per day by early May. This more than offset bearish sentiment in the wake of the mid-April Doha output talks.
“General oil market sentiment seems to have improved to such an extent that Brent prices fell into short-lived backwardation in April for the first time since mid-2014, aided by expectations of heavy North Sea field maintenance.
“Further oil price rises, though, are likely to be limited by brimming crude oil and products stocks that will remain a feature of the market until more normal levels of inventory are reached”.