Many fear hedge funds are pushing up crude oil prices prematurely, which will lead to a renewed crash when the bubble bursts, as it did after the last big run-up in prices between January and May 2015. John Kemp argues that hedge funds and speculators are not driving the recent rally in oil prices. That’s a pretty stark argument from a very good piece in January by F. William Engdahl, who argued in January that 60% of today’s oil price is driven by speculation.
Crude oil prices continue to rise as the market prepares for another drop in the U.S. rig count and floods in the Gulf of Mexico could slow U.S. oil imports. This comes as Exxon Mobil and Chevron report earnings and no doubt more capital spending cuts in a historic retrenchment in the oil complex.
Oil futures slid after setting a 2016 high on Thursday as traders locked in profits, though analysts said supply disruptions, strong investor appetite and a weakening dollar could push prices higher soon.
U.S. economic growth braked sharply in the first quarter to its slowest pace in two years as consumer spending softened and a strong dollar continued to undercut exports, but a pick-up in activity is anticipated given a buoyant labor market.
Crude oil prices surged again as U.S. oil production fell for the seventh week in a row and global central bankers seem a little more upbeat. With the Federal Reserve changing the wording and removing “risks" from their statement and Japan’s central bank holding fire, the demand expectations have changed dramatically from just a few months ago when many thought that global oil demand would grind to a halt.
WTI and Brent are now at the highest level of the year as even this week’s fundamental snapshot (basis API) was bullish. The battle of views continues with the view that the market is already in a rebalancing pattern continuing to dominate the narrative as well as the short-term direction of the market. Unless there is a more consistent pattern of bearish current fundamentals the upside rally is likely to continue.
Technology stocks fell in Europe and Asia on Wednesday after worse-than expected results from Apple and Twitter, while the dollar weakened before a U.S. monetary policy decision, propelling oil to 2016 highs.