After what the last 3 days have shown in the market, people are probably sitting at their desks thinking “what can stop this collapse?” Crude is inching closer and closer to reaching the barrier of $20 and $30, but seems that it is stuck in the $30-$32 range as of late. What are some factors that could release the bulls on this suffering market?
- The non-removal of the Iran sanctions
- Iran/Saudi Arabia’s continuous feud
- Improvement in global economies such as China
- OPEC announcing production cuts
- Any supply disruption that is causes a critical/abrupt halt in production.
Let’s focus on the good ol' U. S. of A for a moment. The U.S. crude production has been higher 6 of the last 7 weeks in the DOE statistics report. When it comes to WTI, crude oil prices did manage to reach its first gain of the year, but only rising 4 cents to close at $30.48. Looking at a global standpoint, the EIA believes that the first forecasted draw on global oil inventories is expected in the third quarter of 2017. That’s a good bit away from present time. So with these predictions, the EIA confirms that they continue to believe that oil prices will remain at historically low values for the rest of 2016 into 2017.
To reiterate a statement from the blog yesterday, prices are so low that in Pennsylvania, one of the highest taxed states for on-road diesel and gasoline, you can purchase on-road diesel for less than what it is taxed, federal and state. The 1990’s are back in town.