Last Friday’s trend continues as crude is currently down $0.84 to $45.08 and RBOB and HO are both down $0.0359 and 0.0230 respectively. To recap last week: Monday futures prices fell after the strike in Kuwait ended and additionally when there was talk of increased crude supply in Cushing. Tuesday, however, prices began to rally largely due to the weakening of the dollar index, and continued to rally throughout the week with talks of increased gasoline demand forecasts. A 2016 high for WTI was hit last Thursday just before Friday’s drop in prices when the global supply glut headline came back into the picture with rumors of increased production from OPEC.
Once again, there is a ton of information flooding the market, both bullish and bearish, making it very difficult to speculate which way it could go.
- U.S. oil rigs declined last week, again, to a six-year-low of 332.
- OPEC’s monthly oil production hit the highest level since 1989 in April at 33.217 mbpd.
- Iraq’s production was 4.31 mbpd in April and Iran’s was 3.5 mbpd.
- U.S. gasoline consumption is up 5.6% over the past four weeks and a steady increase in demand is forecasted to extend into the driving season.
- The price of WTI has been slashed in half since mid-2014. Companies such as Exxon Mobil have reported a 63% fall in first-quarter profits this year, considerably correlated to crude falling below $30/bbl in January.
- In the news: Baker Hughes and Halliburton terminate their $28 billion merger, which is considered by U.S. Attorney General Loretta Lynch “- a victory for the U.S. economy and for all Americans.”