Oil prices jumped more than 2 percent, returning to five-month highs. Since the beginning of the week quotes Brent increased by nearly 6 per cent, while WTI – nearly 10 percent. Market sentiment improved amid signs that the continuing global oversupply can be reduced. The increase in gasoline consumption in the US, growing signs of reducing the various countries of the world production and the recent strike of oil industry workers in Kuwait have contributed to the return to investment in the sector.
Earlier this week, the US Department of Energy announced that oil production in the country decreased by 0.3% to their lowest since the end of 2014, 8.95 million barrels per day.
“Today’s dynamics due to growing optimism of market participants, which is becoming more and more investors gradually become convinced that the worst is behind us and the global process of restoring balance in the oil market has already begun.” – Said Dominic Chirichella, senior partner of the Institute of Energy Management. Meanwhile, Goldman Sachs analysts have pointed out that the recent rise in oil prices is not supported by fundamentals in the physical market, and there is a risk of falling prices in the near future. “Given the short-term and temporary nature of the current market balance, and the lack of stable long-term deficits in any of the markets react to these early signs of economic recovery and to make recommendations to invest in raw materials” – said the expert.
Later today, investors will be watching the data of oil and gas service company Baker Hughes in the number of drilling rigs for oil and gas in the United States. Recall the previous week the number of installations has decreased by 3 units, or 1%, and amounted to 440 units. In annual terms, a decline of 514 units, or 54%.
WTI for delivery in June rose to $44.15 a barrel. Brent for June rose to $45.61 a barrel.
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