Oil price settles higher despite rising numbers in U.S oil rigs

The energy field industry gained its first bullish platform in the global market in the last year after OPEC decided to put an oil cap in the production line. Such a drastic action has not been taken by OPEC since 2008 but they had no options to control the falling price of oil. After the production cap stated by OPEC most of the professional oil investors went long in the oil industry and made a decent profit. In the last week, the price of oil traded higher in the global market despite the rise in the number active oil rigs in the U.S economy. Most of the leading investors are thinking that the price of oil will rally higher in the upcoming weeks since OPEC showing a great sign of commitment in the global market to stabilize the energy field sector. The current level of supply of oil from the oil industry is excessively higher than the current demand line and if things continue in such a fashion the recent bullish momentum in the oil industry will soon fade away in the global market. However, the last week gain in the price of oil was very much promising and it reflects OPEC positive effort in the energy field.

Crude settles higher: In the last Friday, the price of crude pushed higher in the global market after OPEC took the exponential rise in the number of active oil rigs in the U.S economy into their concern. According to Barker Huges data, the number of active oil rigs in the U.S economy went up for the eleventh straight week which is good enough to create another strong bearish pressure in the oil industry. If the production continues in normal pace from all the active oil rigs in the U.S economy then the oversupply problem in the oil industry will again push the price of oil lower in the global economy. In the year 2016, the number of active oil rigs in the U.S economy was only 12 during the month of January and now it’s 662 and still rising. The price of crude futures gained near about 25 cents in the global on the New York Mercantile Exchange and it traded at $50.60 a barrel. On the other hand, the price of Brent also traded higher in the global market and traded at $53.62 a barrel in the global economy. Considering the last week gain in the cfds industry the investors are in little bit ease even though the active oil rigs in U.S is extremely high at the current moment.

OPEC Actions to bring stability: The price of oil has been rallying higher in the global market due to the OPEC oil cap program and most importantly this program will be extended for another six months to ensure that the current oversupply problem is mitigated to a great extent. Though there are lots of issues that OPEC needs to take care before taking a step in the global market yet they managed to cut the current production of crude futures by 5.8 percent by the end of this quarter. Most of the leading oil producing countries are now adhering to OPEC rules and many non-OPEC oil producing countries promised that they will also limit their current production of oil to bring stability in the energy field. However, the current stock of crude by the U.S is over by 6 percent compared to the past year data and if such stocks continue to rise the price of oil will be under strong bearish pressure in the near future. In this regard, the U.S government has stated that they will also limit their current production oil so that the energy field gets stabilized and overcome the current oversupply problem.

Actions from leading oil producers: Most of the leading oil producing countries in the world are now adhering to OPEC rules so that the energy field gets stabilized in the global market. Countries like Saudi Arabia and Kuwait has already cut their current production of oil more than they promised in the global market. On the contrary, Iraq was producing excessive oil and fueling the oversupply problem. However, they have also stated that they will limit their current production of oil once their economy is stabilized to a certain extent. Regarding the rising number of active oil rigs in the U.S economy OPEC has already taken steps to limit the active production rate of oil in the U.S. In this regards the U.S government has also stated that they will adhere to OPEC rules strictly so that the price of oil is not again pushed by the bears in the market. If the current production cap program goes for another six-month extension then we will another sharp rise in the price of oil.

Summary: The strong surge in the price of oil in the last week created a strong bullish sentiment in the oil market. Most of the leading investors are thinking that the price of oil will rally higher in the global market in the upcoming days if OPEC extends their current oil cap production in the global economy for another six months. Considering the fundamental and technical factors the overall sentiment stays bullish for the oil industry for the upcoming weeks.

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