Daily Management Review

U.S Oil Market Arrives At A Steadier Ground


After a long span of low oil prices, the U.S market gains a steadier footing.

After the low prices of oil market that prevailed for last “six-and-a-half-year”, on Friday, the market reverted back whereby settling down for steady prices whereby recovering equity markets. The news came from the U.S about its strong economic growth while Nigerian crude oil prices have gone low.
On Thursday, the oil market had the “biggest one-day bounce” ever since the lowering market rate of 2009. This trend has allowed “North Sea Brent LCOc1 and U.S. light crude CLc1” to increase by over ten percent. After nine weeks the crude oil market of the United States started on a track for its “first weekly gain”. Thus, marking the end of its losing streak that lastest the longest ever since the year of 1986.
However, from the month of May, the global market of crude oil came down by “a third” and continues to remain below half of its previous year’s value which has been resulted by the over supply chain which was met by a sluggish demand on the receiving end. The recent fall of the market could be attributed to the worries of the investor with Chinese economy.
Nevertheless, the fall was a little too much than its correction measure, says analysts. Moreover, it also rebounded too fast. The recovery was facilitated by a number of events like the rise in stock market, the Nigerian “pipeline outrage”, and strong data growth in the U.S. The ANZ analysts noted, while advising to its customers that:
"A short-covering rally, led by crude oil, pushed commodities higher across the board”.
"Better-than-expected U.S. GDP numbers were the main spark, although the force majeure on ... exports from Nigeria extended the gains."
While, the Reuters report uphold the market data, wherein it mentions:
“Brent was down 15 cents at $47.41 a barrel by 1015 GMT. It settled $4.42 higher at $47.56 on Thursday. U.S. crude was unchanged at $42.56 a barrel, after ending up $3.96”.
The week began on a shaky ground for the Chinese, while it witnessed two stock jumps during its course and global rally was extended by the “Asian shares”. Based on the domestic demand, the estimated growth of U.S. economy that was arrived had been well surpassed by the fast growing economy of the country. GDP grew at a pace of “a 3.7 percent” while the estimated annual growth, as per the commerce department, was at “2.3 percent rate”.
The Nigerian unit of Shell announced:
“...force majeure on Bonny Light crude oil exports on Thursday after shutting two key pipelines in the country due to a leak and theft”.
Various members of the Petroleum Exporting Countries were approached by Venezuela in order to arrange “an emergency meeting with Russia” so that they can devise a plan in order to boost the said market. As per the Middle East Gulf members of OPEC:
“...there is little chance of the cartel meeting without the support of Saudi Arabia, which has said it sees no need for a gathering”.
Source(s): Reuters.com