Oil prices are bullish after crude stocks fell more than analysts expected.
Oil prices are on Fire today. What!
Oil prices went up today, Wednesday, with U.S. crude gaining for the seventh straight day, after industry data showed a bigger than expected drop in inventories (decrease in supply + increase in demand = increase in price) and investors shrugged off rising new deaths and infections in the pandemic.
With the U.S. West Texas Intermediate (WTI) up by 34 cents (0.6%), moving the price to $53.55 per barrel by 08:05 GMT — after gaining nearly 2% on yesterday (Tuesday), Brent crude was also up 36 cents (0.6%), at $56.94, having risen 1.7% in the previous session.
Both benchmarks (WTI and Brent) are trading at their highest since February, before the coronavirus outbreak in China began spreading across the world and billions of people went into lockdown to prevent a pandemic that is now in a deadlier second wave. Oil stocks in the U.S. dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday- which is way more than what was anticipated by analysts.
Analysts are of the view that falling inventories and rising oil prices are likely to tempt U.S. drillers back into a competitive endeavour, especially as Saudi Arabia and other major producers cut their output, effectively ceding market share to American producers.
With this impressive growth, do you think now is the time to buy oil or should investors be more patient?