Oil hit a low of $47 dollars before US government expected crude inventories would dip during a season of strong demand.
The black stuff has struggled below $50 as investors fear a global gut is dwindling slower than previously thought as rising stockpiles offsets cuts by the Organization of Petroleum Exporting Countries. US oil rigs have pumped at the highest rate in two years.
While US producers rack up inventories it will be unlikely that prices will topple the $50 mark. To see oil rise above this level we will need to see consistent and cohesive cuts from OPEC. On the other hand, if these seasonal levels of demand extend further into the year.
Since June, US stockpiles have declined by about 43 million barrels. Meanwhile, production is at its highest point since July 2015.
Oil trader sentiment remains subdued and the consistent increase in production will keep bulls at bay. Perhaps tomorrow’s crude oil inventories will help tip up the price of the commodity.
By Adrienne Murphy —— Chief Market Analyst, Avatrade