Last Week Oil Market Data:
Crude Oil Price Movement: Oil prices moved higher last week on support from OPEC production cut extension, decline in U.S. crude oil production and draw-down in U.S. crude oil and gasoline stockpiles. Brent crude and WTI closed the week up by more than 5 percent to around $53.80/bbl and $50.85/bbl respectively.
U.S. Crude Oil Inventories: U.S. crude inventories decreased by 1.8 million bbl to the week ending May 12. Last week’s draw-down in US crude inventories followed another week of a significant fall in stockpiles. The fall in stockpiles supported oil prices to edge higher on Wednesday.
U.S. Gasoline Stocks: U.S. gasoline inventories fell by 0.4 million bbl to the week ending May 12. U.S. gasoline inventories have been falling for for almost two weeks now following few weeks of build-up. A trend that is supporting the upward movement in oil prices along with other market parameters.
Weekly U.S. Crude Oil Production: Last week, U.S. crude oil production fell for the first time following few months of continuous increase. Last week, U.S. crude oil production decreased by 9,000 bbl/day to 9,305,000 bbl/day. At its current level, US crude oil production is up by more than 514,000 bbl/day from the same time a year ago. The fall in U.S. crude oil production has supported oil prices last week and it is expected to positively support the upward movement in oil prices this week as well. Despite last week decline in US crude oil production, it is still expected that U.S. crude output will continue to increase and the increase could accelerate after OPEC meeting.
U.S. Rig Count: U.S rig count increased by 16 rigs to 901. Oil rig count was up by 8 rigs to 720, while gas rig count was up by 8 rig to 180 as well. At its current level, U.S. rig count is up by 497 rigs from the same time a year ago. With the recent announcement from two of the biggest OPEC and non-OPEC producers to extend the oil output cut, it is expected that U.S. rig count will continue its growth.
This Week Oil Price Forecast:
Last week oil market data and news were quite positive. Starting with the drawdown in U.S. crude oil and gasoline inventories following a significant drawdown the week before, decline in U.S. crude oil production, weakening U.S. dollar aimed Trump’s political woes, and finally the assurance from Saudi Arabia that OPEC and other oil producers are on course to agree an extension of supply cuts during their meeting on May 23. All these positive sentiments have driven oil prices last week by more than 5 percent and are expected to drive oil prices up this week as well.
Looking at last week oil market data and news, and this week’s expected events, it is obvious that oil prices is set for a positive week ahead. Oil price is expected to continue trading on the green this week and could hit levels not seen since February 2017. Brent crude and WTI are expected to continue their upward movement and could go up by 1 to 2 percent in the first two days of trading. On Thursday, which is the day when OPEC’s 172nd ordinary meeting is due to take place in Vienna, Austria, oil prices could go up by 3 percent.
We expect U.S. crude oil production and rig count data for this week to show increase in both oil output and rig count, however, these data will not have a significant impact on oil prices as the oil market, traders and investors are focused on OPEC’s meeting.