Oil benchmark is up 200% and prices are on the rise, but for how long?
Oil benchmark is up 200% and prices are on the rise, but for how long?
Brent crude futures are at $43.35 a +0.58% increase.
With oil prices recovering gradually – West Texas Intermediate crude has recovered almost 8% in the past month. U.S. oil benchmark has gained more than 200% due to production cuts and improving demand.
Analysts believe that if the recovery sustains and more people continue to get back to work, many explorers will consider adding rigs signifying the possibility of more oil production.
This is speculation as data from the American Petroleum Institute industry group, and the U.S. Energy Information Administration is expecting to show a 100,000 barrel rise in gasoline stockpiles, six analysts polled by Reuters estimated.
Current Oil Futures
On average, the EIA is expected to report a decline of 3.7 million barrels in crude stockpiles for last week, according to analysts polled by S&P Global Platts. That would mark a second-straight weekly fall. Also, forecasting a supply decline of 1.2 million barrels for gasoline and 500,000 barrels for distillates.
Short Term Energy Outlook
For Brent crude, it raised this year's forecast by 6.5% to $40.50 and next year's by 3.8% to $49.70.
The EIA also said it expects domestic oil production to hit an average of 11.63 million barrels per day this year, up 0.6% from the previous view, while lifting the 2021 forecast by 1.6% to 11.01 million barrels per day.
"Changes in supply and demand have shifted global oil markets from an estimated 21 million barrels per day of oversupply in April to inventory draws in June," Linda Capuano, EIA administrator, said in a statement. "EIA estimates June consumption increased by almost 10 million barrels per day from April at the same time that global supply fell by 12 million barrels per day as a result of reduced production from OPEC+ and price-driven declines in the United States and Canada.
"COVID-19 transformed global oil markets in the first half of 2020, sending prices on a wild ride and spurring historic changes to energy supply chains and products used to invest in crude.
Although oil markets have gained a sense of stability, investors are bracing for more upheaval in the supply/demand picture in the months ahead, even if they don't expect events to be as momentous as in the first half.