Crude oil futures bounced back from their lowest point in two months Tuesday, with August crude oil futures were up around 3% slightly after 9:30 AM ET. West Texas Intermediate crude was also up above $45 a barrel.
Oil prices were helped by a weaker dollar, but an overhang from oil stocks and investors changing their previous bullish bets on the commodity weighed on prices. The Energy Minister of Saudia Arabia Khalid al-Falih said Tuesday that the oil industry needed prices to be above $50 a barrel to sustain investments, but that the pressures weighing on prices would continue to prevail. Inventory excess continues to keep prices low, as hundreds of millions of barrels of surplus oil are still on the market.
Monday saw oil prices hit their lowest mark in the last two months, mainly because of renewed fears of oversupply. The drop in prices was bolstered slightly though because of a brief suspension of tanker loading in Iraq and reports of new attacks in Nigeria. Hedge funds continue to cut their exposure to oil prices, which has helped to bring Brent crude oil prices down nearly 12% from their peak price in June.
It should be noted though that in its first assessment of 2017, OPEC forecast higher demand for its crude oil next year as the global surplus is expected to continue to slowly shrink. The organization said that global demand will increase at a similar pace to which it did in 2016, and that production outside of OPEC will fall.
Oil prices have recovered more than 70% from the 12-year lows reached earlier in the year as OPEC’s strategy to lower prices and pressure rivals has been successful. Global oil demand is predicted to increase by 1.2 million barrels a day next year to reach an average of 95.3 million a day, with most of the growth coming from emerging economies like India and China.
Oil production outside of OPEC is expected to fall by 100,000 barrels per day, as declines in the U.S., Mexico, and Norway will overshadow the expected growth in Brazil and Canada. That figure is much lower than the contraction of 900,000 barrels expected this year.
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Why Oil Is Up 3% Today
Crude oil futures bounced back from their lowest point in two months Tuesday, with August crude oil futures were up around 3% slightly after 9:30 AM ET. West Texas Intermediate crude was also up above $45 a barrel.
Oil prices were helped by a weaker dollar, but an overhang from oil stocks and investors changing their previous bullish bets on the commodity weighed on prices. The Energy Minister of Saudia Arabia Khalid al-Falih said Tuesday that the oil industry needed prices to be above $50 a barrel to sustain investments, but that the pressures weighing on prices would continue to prevail. Inventory excess continues to keep prices low, as hundreds of millions of barrels of surplus oil are still on the market.
Monday saw oil prices hit their lowest mark in the last two months, mainly because of renewed fears of oversupply. The drop in prices was bolstered slightly though because of a brief suspension of tanker loading in Iraq and reports of new attacks in Nigeria. Hedge funds continue to cut their exposure to oil prices, which has helped to bring Brent crude oil prices down nearly 12% from their peak price in June.
It should be noted though that in its first assessment of 2017, OPEC forecast higher demand for its crude oil next year as the global surplus is expected to continue to slowly shrink. The organization said that global demand will increase at a similar pace to which it did in 2016, and that production outside of OPEC will fall.
Oil prices have recovered more than 70% from the 12-year lows reached earlier in the year as OPEC’s strategy to lower prices and pressure rivals has been successful. Global oil demand is predicted to increase by 1.2 million barrels a day next year to reach an average of 95.3 million a day, with most of the growth coming from emerging economies like India and China.
Oil production outside of OPEC is expected to fall by 100,000 barrels per day, as declines in the U.S., Mexico, and Norway will overshadow the expected growth in Brazil and Canada. That figure is much lower than the contraction of 900,000 barrels expected this year.
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