Oil prices rose sharply in US trading yesterday as a surprise draw down as reported by the Energy Information Administration.
Online PR News – 12-May-2016 – Toronto, Ontario – Baumann Group
Oil Prices Rise as Surprise EIA Report Shows a Significant Draw Down – 12th May 2016
Oil prices rose sharply in US trading yesterday as a surprise draw down as reported by the Energy Information Administration saw a reduction of 3.4m barrels the previous week.
On Tuesday the American Petroleum Institution had reported that US crude stockpiles had increased by 3.45m barrels.
The news saw the energy commodity rise to 6 month highs.
Domestic production in the US was down from 8.825m barrels per day to 8.805m barrels per day.
The data helps ease concerns about the current fears of global oversupply. With OPEC not looking to curb production and the Saudi Arabian oil producer, Saudi Aramco quoted as saying that they intend to increase their production to ensure they keep market share and figures out of Iran showing that their production is now up to 700,000 barrels per day, close to pre sanction levels.
US Crude Closed Wednesday up 3.5% to $46.23 and Brent closed in London up 4.6% to $47.60.
The energy commodity has seen volatility since the beginning of the year and many sector commentators are calling a $45-$50.00ppb as this would be in line with the current supply and demand being seen globally.
The news helped push down the local markets in the US as energy stocks showed marginal loses. Higher fuel prices in the US as we head to what’s known as ‘driving season’ will have a knock on effect on consumer spending which is the key driver of the local economy. If further draws are seen in the US this may alleviate some of the pressures on the local indexes however is OPEC continues to keep production levels high for market share, higher oil prices could be on the cards.
Main US Index Closes 11th May:
S&P 500 – 2,064.46 (-0.96%)
Dow Jones – 17,711.12 (-1.21%)
NASDAQ – 4,760.69 (-1.02%)
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