Oil market overview
Oil prices rose to $54.50 on Thursday having recovered from losses triggered by the increase of 1.57 million barrels in US crude inventories bringing total stockpiles to a record 535.5 million barrels. US crude production increased by 52K barrels to 9.2 million a day last week, according to the recent estimate of the Energy Information Administration.
The build in US stocks and revival of the US shale industry are bringing to naught OPEC-led efforts to reduce the global oil glut. But it seems that market participants don’t lose their faith in the OPEC. Oil prices surged significantly in past days due to these positive market sentiments. Market players will continue to focus their attention on the success in the negotiation over a further extension of production cut deal and the effects of the current agreement (some analysts believe that they will be evident as soon as a significant amount of crude is sold out of inventories. A formal decision on the extension/non-extension of the six-month output cut deal will probably be delivered on May 25, after the 172nd OPEC meeting.
In the short-term, the US data releases from the Energy Information Administration and rig count data from Baker Hughes will be the main drivers of the oil prices.
Brent crude futures spiked to $54.75 a barrel on Thursday, while U.S. West Texas Intermediate (WTI) crude futures rose to $51.45 a barrel.
Source: US Energy Information Administration