Oil Stages Comeback On Bullish EIA Data
Oil prices increased from the mid-$30s per barrel this week, with Brent once again rising above $40 per barrel and WTI sitting near $39 per barrel at the end of the week. Prices bounced around, trading down on growing pessimism surrounding the Doha meeting on April 17, but receiving a boost from the latest EIA figures.
EIA data looks bullish. The U.S. saw oil production fall by 14,000 barrels last week. The U.S. oil industry has posted consistent declines in recent months, and while the weekly data from the EIA is sometimes inaccurate, the best guess is that the U.S. is producing 9.008 million barrels per day right now. While it could take weeks or months to know conclusively, the U.S. could be about to drop below the key threshold of 9 million barrels per day in oil production.
Also, oil storage levels dropped last week for the first time in two months. Inventories fell by 4.9 million barrels to 529.9 million barrels and while that is down just a bit from the previous week’s record high, the oil markets grew optimistic that the drawdown finally marked an inflection point. If the U.S. posts a few more weeks of drawdowns, oil prices will likely firm up as the data will be pointing much more confidently towards the supply/demand situation reaching a balance. In other words, the data is showing more decisive signs that the global supply overhang will narrow and potentially disappear towards the end of this year.
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