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Oil closes sharply higher despite rising US inventories

05/29/2020 | 19h32
Oil closes sharply higher despite rising US inventories
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Oil prices ended the session on a consistent high, despite unexpected growth in weekly stocks of the commodity in the United States.


Investors attributed the optimism to the positive outlook for risky assets in the financial markets today, which reflect the prospect of a resumption of the economy after activity restrictions due to the covid-19 pandemic.




Brent's global benchmark futures contracts for August ended the day up 1.63% at $ 36.03 a barrel at ICE in London. July's West Texas Intermediate (WTI) prices ended the session with gains of 2.74%, at $ 33.71 a barrel on the New York Mercantile Exchange (Nymex).


"The oil market has regained confidence, as fears of excess supply are taking a back seat. With the favorable winds of improvement in the mood of the market, support from visible signs of an improvement on the supply side is yet to come, "said Norbert Rücker, head of economics and research at Next Generation, Julius Baer.


"We maintain our constructive vision and see oil prices above $ 40 a barrel in late summer [in the Northern Hemisphere]," he added.


Despite the optimism related to a rebalancing of supply and demand for the commodity, oil stocks in the US rose by the equivalent of 7.92 million barrels in the week ended May 22, to 534.422 million, according to seasonally adjusted data released today by the Department of Energy (DoE).


The expectation of consensus, in a survey of "The Wall Street Journal" with analysts, was for a drop of 1.6 million barrels last week. According to official data from the DoE, gasoline inventories decreased by 724 thousand barrels last week, to 255 million barrels, against the expectation of a drop of 300 thousand barrels in the period.


"We have recently stated that the oil market is pricing positive developments and the next rebalancing of supply and demand very quickly," said Commerzbank analyst Eugen Weinberg in a note.


"Reports of very weak demand in the US during holidays and, in fact, yesterday's API numbers point to weaker than expected demand dynamism." Yesterday, the American Petroleum Institute (API) reported a weekly high of 8.7 million barrels in the United States.


The third consecutive decline in inventories at the US storage center in Cushing, Oklahoma - the WTI delivery point - has also supported markets.


At Cushing, inventories fell 3.4 million barrels to just 53 million, which is well below the maximum working capacity of 76 million.



Font: T&B Petroleum/Boletim SCA
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