Yesterday we saw another resilient rally in the market, with NYMEX HO settling up $0.0370 to $1.4401 and RBOB finishing up $0.0181 to $1.6063 bringing week-on-week gains to about 17cts/gal. WTI gained $1.51/bbl to $47.72/bbl at settle. The market is currently trading up about a cent and a half on HO and RBOB, respectively. With benchmark crude prices approaching $48/bbl, the question now is whether we will soon see $50 crude for the first time in 2016.
Many investment banks and traders believe so, conceivably setting the scene for a move beyond previously forecast benchmarks. Yesterday Goldman Sachs, a bank notably known as a commodity price bear, raised its March crude price forecast of US $45/bbl to $50/bbl for the second half of 2016. The DOE stats come out Wednesday at 10:30 a.m. EST, and it may take another stock draw to achieve the jump. For some perspective, consider that WTI crude hit a 13-year low of $26.21 a barrel back in February.
With stocks falling and demand continuing to rise, the consensus of analysts over the past several weeks has supported the belief that oil supplies are rebalancing, however there is discussion as to whether the rebalancing is really taking place as quickly as some believe. According to Energy Aspects, the bullish diesel trends we’ve been experiencing since April can be mostly be attributed to widespread, heavy refinery maintenance and turnarounds, resulting in drops in production and a diesel deficit.
In other bullish news, domestic political factions in Libya representing the East and West of the state have agreed to establish one unified oil structure. Foreign Minister Mohammed Siyala told reporters in Vienna, "These institutions can only be managed centrally. That's why it was agreed that both institutions from east and west be united, so that there is only one oil company, one investment company and one central bank." Exports have been blocked for two weeks due to the rivalry, and this agreement will allow crude oil shipments from the port of Marsa-al-Hariga to resume. No timeframe for this unification has been established.