Crude oil prices rose at the end of May 19, with both Brent Crude and West Texas Intermediate ending the day past US$30 [AU$45.50] per barrel.
This continues the upward trend of crude oil prices following a dismal performance last April. June futures average ended $32.50, which is the first time a futures trading day ended above $30 this quarter.
Prices for July futures off to a good start
July futures ended Tuesday, May 19, seeing both Brent and WTI benchmarks at a higher rate than the previous day’s close.
WTI for July ended the trading day at an increase of 0.8%. This earned the U.S. oil benchmark $0.25, trading at $32.22 a barrel.
Brent Crude, on the other hand, ended trading at $35.17 a barrel. The international benchmark saw a good increase of 1.5%, gaining almost a dollar on the day.
Reduced production and increased demand
The recent rally that’s been seen in the oil market has been mostly due to the deep cuts that OPEC and its allies have been undertaking. This has brought the daily production of crude down by 10 million barrels a day, or possibly more.
The easing of global restriction policies may have also urged the market along. CNBC has reported that the U.S. has been seeing more refinery runs as of late after its states started easing its restrictions.
This means that more refined fuels are being produced now than back in April, at the peak of the first wave of the coronavirus pandemic. The influx of vehicles on the road, as well as the resumption of many manufacturing plants, could be spurning this uptick in demand.
It remains to be seen, however, if the actual production of refined fuels is anything worth noting.
However, the American Petroleum Institute (API) released data that showed a reduced U.S. crude inventory of 521.3 barrels, down by 4.8 million, according to Market Watch.
Uncertainty is keeping prices under control
Several things are keeping crude oil prices under control.
As potential further waves of infection loom over global economies, more and more businesses are letting go of their employees. This wave of layoffs could slow down the economic recovery worldwide, which will directly affect the oil market.
In the U.S., shale oil drillers are helping keep production low by not drilling. If more shale drillers become active, this could flood the market with surplus oil, putting a lid on any potential gains oil futures could be capable of attaining, says Oil Price.
As crude oil prices improve and stabilize, however, this situation could change.