Crude oil prices roared back after the Russia central bank sent signals that they were not very happy about the rapid drop in crude prices, and European markets bounced back as Italian political factions have decided to talk. This comes as there is more evidence that OPEC and Non-OPEC have achieved their goal of getting rid of the global petroleum glut.
In January 2015, WTI crude oil futures broke below its long-term trendline that dated back to the 1998 low of $10.65 per barrel after an eight-month sell-off that took crude from above $100 to below $50. On the last trading day of January 2015, crude oil rallied close to $3 in the last hour of trading to settle above that long-term trendline. We made a note of it at the time, which seemed to confirm the importance of this level.
Crude oil prices are trying to stabilize as the market is reeling from the seasonal peak in the gasoline switchover, a potential rise in OPEC and Non-OPEC production and sanctions on China. Tough talk on NAFTA negotiations as well as a created political crisis in Italy.
Crude oil prices are still reeling from the threat that OPEC and Russia may raise output and fear that turmoil in Italy could cause larger problems in the Eurozone. This comes as sub-tropical Storm Alberto poured a lot of rain in Florida denting some gasoline demand. While it looks like the first hurdle of getting gasoline supplied by Memorial Day has cleared, the oil market will still be undersupplied even if OPEC and Russia add the amount of oil that they say they will.
As we head toward the weekend, oil prices have turned sharply negative after starting the week on the front foot. Barring an unexpected rally later on today, oil prices are set to end a six-week winning streak. This would halt a rally that began a few months ago when oil prices found support after signs emerged that the US would reinstate economic sanctions on Iran and as crude output from some OPEC members fell, most notably Venezuela.
Crude oil prices are under pressures as the Organization of the Petroleum Exporting Countries (OPEC) and NON-OPEC start laying the groundwork for a production increase and traders take profits ahead of the long holiday weekend.
Crude oil prices managed to recover some of their losses made in the immediate aftermath of EIA’s weekly crude inventories report which showed an unexpected build. Both Brent and WTI oil contracts remain near the multi-year highs they have hit recently.