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Crude prices were modestly higher during the course of the session on Thursday in Asian trading, building an overnight gains, following a much better-than-expected reports on U.S. inventories.  

On the New York Mercantile Exchange, crude futures for June delivery climbed 0.49% to settle at $47.56 a barrel, while on London’s Intercontinental Exchange, Brent added 0.44% to end at $50.44 a barrel.     

In an overnight trade, crude futures also climbed sharply during the session on Wednesday as investors were enthusiast with the latest report from the Energy Information Administration (EIA), which revealed U.S. crude inventories declined more than expected.        

Meanwhile, crude prices bounced back above $47 and continued to surge as investors’ sentiment on the rising levels of U.S. oil output softened after the EIA reported a bullish inventory data.      

For the week ending on May 3, crude oil inventories plunged 5.25 million barrels, missing analysts’ expectations for a draw of 1.79 million barrels.      

Subsequently, gasoline inventories inched lower by only 0.150 million against expectations for a draw of 0.538 million barrels. Moreover, distillate stockpiles dipped 1.6 million barrels, compared to analysts expected 1 million drop.

The bullish inventories report came in after crude prices dipped 1% when EIA highlighted its near-term outlook for U.S. oil production and reiterates its estimates for oil prices.     

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Further, the EIA upgraded its crude oil estimate to an average of 9.3 million barrels per day (bpd) in 2017 and 10 million bpd in 2018. However, its estimate on average oil prices in 2017 was cut down to $52.60 a barrel for Brent and $50.68 for WTI.

Market participants are closely watching on the energy minister’s remarks after Saudi oil chief Khalid Al-Falih said that he was “confident the agreement will be extended into the second half of year and possibly beyond."

Oil price gains since November were slashed off after OPEC and other oil producers, including Russia granted to cut output, valuing 1.8 million bpd.

OPEC is set to give further talks on May 25, concerning of whether to extend the settlement to cut production output for an additional six-months before the year ends.   

Best time to Buy Oil

Oil is currently changing hands near $50 again and it seemed that OPEC is likely losing its grip to influence prices as a new wave of new supply is striking the market from Texas to Libya.

The chart below illustrates crude oil price movement amid an unexpected U.S. stocks draw. The commodity is currently trading at $47.51 in a light trading volume. Meanwhile, the RSI at 44.1729 suggests crude prices is settling at a neutral phase.   

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Conclusion

Given the unexpected draw on the U.S. stocks, crude prices were modestly higher and is anticipated to rally further towards the neutral level. However, as there aren’t any strong signs for any significant move, investors are recommended to wait on the sidelines.

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