As the US revealed healthy economic data and prosperous forecasts, the price of Brent crude oil rose on Wednesday 28th May, holding above the $110 per barrel mark. With renewed optimism that the US ‒ the world’s top oil consumer ‒ will continue to demand high levels, the prices for the resource rallied despite some concern from analysts.
The US’s economic data was perked up as long-lasting manufactured goods saw an unexpected rise, causing consumer confidence to follow similar growth patterns; however, with the nation’s equity markets closing at another record level, many analysts were quick to remark that the gains could result in increased profit-taking. Despite this, Brent crude rose by 17c to close at $110.19 per barrel and US oil gained another 1c to close at $104.12, having lost 24c in the previous session.
Speaking about the market fluctuations, Tetsu Emori, the commodity fund manager for Astmax Investment, said: “There are quite a few bullish factors in the oil market that are supportive; we have good economic indicators and uncertainty over Libya and Ukraine. But the US equity market is too strong. My worry is if we see some profit-taking in equities, oil may fall as well.” Mr Emori explained that if oil eventually slipped beneath $103, an expected benchmark was $101.
Meanwhile, the supply outlook of oil continues to affect the world as the rift with Russia widens and disruption in Libya heightens. Paratroopers and aircraft from Ukraine killed over 50 pro-Moscow rebels on Tuesday after the new president said that he would crush the revolt in the east; elsewhere, operations at Hariga port in Libya have been disrupted after a brigade from Petroleum Facilities Guard began protesting about salary payments. The interruption has meant a reduction in production at the Messla oilfield and a complete halt on work at Sarir oilfield; with this in mind, many investors are awaiting stockpile data from the US. This will then be used to gauge the nation’s demand growth outlook to better predict future requirements. A growth in export has been noted in Middle Eastern nation of Iraq, however, where record highs have been noted for May, with shipments averaging 2.60 million barrels a day up to 27th May.
In a preliminary Reuters poll of five experts, it was estimated that crude oil inventory has grown to 700,000 barrels. The report comes ahead of official publications from the US Department of Energy’s Energy Information Administration and the American Petroleum Institute.
This article was written by Montash.
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