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29 March 2024

Oil price nears $55/b as global stocks run low

Published
By Vicky Kapur

Global oil prices closed in on the $53/barrel-mark on Thursday morning, hitting a fresh 2016 high as global stocks ran low.

International Brent crude oil futures for August delivery were trading at $52.74 per barrel at 9.15am UAE time, up 23 cents from their last close.

US West Texas Intermediate (WTI) crude for July delivery was 31 cents higher at $51.55 a barrel at the same time.

According to the Weekly Petroleum Status Report from the US Energy Information Administration (EIA), the country’s commercial crude oil inventories fell by 3.2 million barrels from the previous week.

This came on the back of an increase in petrol consumption in America, the world's largest consumer of petrol and petro-products.

“Over the last four weeks, motor gasoline product supplied averaged over 9.6 million barrels per day, up by 2.6 per cent from the same period last year. Distillate fuel product supplied averaged about 4 million barrels per day over the last four weeks, up by 0.4 per cent from the same period last year. Jet fuel product supplied is up 0.3 per cent compared to the same four-week period last year,” said the EIA weekly report for week ending June 3.

In addition, oil imports in China, the world’s second biggest oil consumer after the US, beat forecasts, with crude imports for May, 2016 up 38.7 per cent over imports in May, 2015.

Further fuelling the oil’s ascent is a weakening US dollar, which has shed about 2.4 per cent in the first eight days of June so far.

Oil prices have now doubled from their 13-year lows of around $26/b in late January. The commodity’s such a sharp rise has made certain technical analysts wary, who see a correction forthcoming.

In addition, they maintain that some of the supply disruptions in Nigeria, Canada and Kuwait may have reversed, and additional crude from Iran may help bring down prices a little or at least slow down the crude’s rise.

Most analysts, however, see oil price hovering in a band of between $50/b and $60/b over the next few years.