Today, crude oil is extending gains amid the record levels over the past ten weeks. The reason is the news about a reduction in stocks in the United States during the second week in a row.
In the London Stock Exchange, the price of Brent oil futures rose by 2.15%, which is equivalent to 0.77 US dollars, and reached 36.52 dollars per barrel. On Wednesday, Brent futures for delivery in July grew by 3.2%, or 1.11 dollars, to 35.75 dollars per barrel, which is the highest level since the middle of March.
WTI crude for June delivery increased by 2.18%, or 0.73 dollars, to 34.22 dollars per barrel. Yesterday, the price grew to 33.49 dollars per barrel (adding 1.53 dollars to the previous figures) to its highest level since the middle of March.
Market participants were focused on oil reserves in the United State. Last week, it became known that stocks decreased by 5 million barrels for the week ended on May 15. Consequently, oil reserves have been declining for the second week in a row which was a surprise to most analysts. Experts projected stocks to rise by 2.4 million barrels. Thus, this good news from the US Department of Energy has only improved positive sentiment in the oil market.
Petrol inventories, by contrast, were up by 2.8 million barrels, while distillates increased by 3.8 million barrels. Oil reserves at the terminal in Cushing plunged by 5.6 million barrels.
The oil market relies on the fact that the global economy has managed to cope with the main wave of the crisis and that the peak of the recession has already passed. Thus, the situation in the aviation industry is improving. The securities of many world’s airline companies which significantly reduced their activities show steady growth. Therefore, the industry intends to fully recover.
Analysts were surprised by the news of the reduction in US inventories. However, even in this situation, they hastened to explain the current trend. First of all, they refer to a decrease in the import and production of oil, while the processing of raw materials, on the contrary, has increased. The storage filling rate has slowed down due to a significant reduction in production. As a result, it may balance the physical market.
The statement of Mohammed Barkindo, the Secretary General of OPEC, who believes that the oil market is gradually recovering, has also supported Brent crude oil.
Moreover, most experts are now inclined to believe that in the short term, the price of oil futures will continue rising. The raw materials will be supported by the ongoing lifting of quarantine across the majority of countries. Economies are gradually opening which has a positive impact on the oil market.
However, concerns over the global economic growth rate, as well as strained relations between China and the United States remain.