Sentiments about an emerging balance in energy markets Friday helped add positive pressure to the continuing rebound in crude oil prices.
Crude oil prices are at their highest levels in roughly 5 months despite some market fundamentals showing a tilt toward the supply side. Data this week from the U.S. Energy Information Administration show domestic crude oil inventories increased 2.1 million barrels from the previous week, a reversal of historic declines for this period.
“At 538.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year,” EIA said in a weekly market report.
Crude oil prices were supported this week on a renewed interest among major oil-producing nations to revisit output. A proposal to freeze production at January levels tabled last weekend in Doha collapsed after Saudi Arabia said no agreement was possible without Iran, which said it would consider participating only after it regained a market share lost to economic sanctions.
Oil prices at one point dropped below $30 per barrel this year on signs the global economy was moving too slow to take on the extra supplies. A graphic produced Friday by Credit Suisse indicated that, from its perspective, “the oil market is rebalancing.”
After an up-and-down day Thursday, crude oil prices continued the rally into Friday, with the price for Brent gaining 1.6 percent to $45.18 per barrel, its highest level since early November. West Texas Intermediate, the U.S. benchmark price for crude oil, was up 1.5 percent to $43.82 per barrel.
Russia, which has offered vocal support for a production freeze, said the industry was undergoing a structural transformation because of economic and market strains. Despite this week’s 9 percent climb in crude oil prices, Russian Deputy Minister of Economic Development Alexei Vedev said Friday there was a ceiling in sight.
“We assume the oil prices range of $40- $60 [per barrel] is the new reality and the new normal situation for the next five years,” he said.
Source: April 22 (UPI)