The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy
Oil prices are once again on the verge of reaching $70 supported by the recovery in financial markets, especially the U.S stock exchange, which was in correlation with oil prices shortly after U.S. President Donald Trump launched a trade war with the world’s biggest oil importer; China.
U.S. oil stocks are dwindling, even though oil production in the U.S. is gradually increasing. This is good news for oil prices since the decline in oil stocks in industrial countries has been the most important factor behind the boost in prices over the past six months.
The Energy Minister of Russia Alexander Novak briefly stated last week on behalf of Russia, the de-facto leader of non-OPEC producers, that he supports any long-term agreement for further cooperation with OPEC countries proposed by the de-facto leader of OPEC, Saudi Arabia's Crown Prince Mohammed bin Salman, although the realization of such an agreement remains uncertain.
Last week’s oil markets will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) oil inventories, weekly EIA crude oil production in the U.S. and weekly U.S. Baker Hughes rig count.
Brent oil started the week with a plunge to $67.64 due to turmoil in financial markets.
However, it recovered to $68.12 through the lowering of 3.28 million barrels in U.S. inventories, as detailed in the weekly API report on Tuesday.
It slid down to $68.02 on Wednesday owing to an increase in U.S. crude oil production by 27 thousand barrels per day to 10.46 million barrels per day.
On Thursday, it recovered to $68.38 with the recuperation in financial markets and on Friday, it dropped and settled at $67.11 at the end of the week propped up with the possibility of increased production based on the ten oil rig count increase in the U.S., according to Baker Hughes data.
This week, in the releases of OPEC and the IEA’s Monthly Oil reports, declines in global oil stocks are expected to the extent that new increases not seen since the price boom in July 2014 could emerge. The main target of OPEC and non-OPEC participating countries, which is the surplus removal over the five-year average in industrialized countries, has almost been reached, but 50 million barrels per day still needs to be drained from stocks, according to the latest reports of OPEC and the IEA in March.
If financial markets stabilize and if the reports reveal a further drop in the 50 billion barrel surplus, Brent oil could reach prices upwards of $70.
- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.