The crude oil price has reversed its current trend of strong growth on Friday. However, the Brent variety will still end the week with appreciation, which is the first gain of nearly five weeks, due to tensions in the Middle East and hopes of lowering US interest rates that boost global growth.
The Brent oil variety is trading with a decline of 0.6% to 64.06 USD per barrel and the expectations are for a weekly growth of 4%. Meanwhile, the American West Texas Intermediate (WTI) oil is edged lower on Friday by 0.6% to 56.73 USD per barrel and for the week the price growth should be around 8%
US President Donald Trump initially downplayed the incident with the Iranian military drones, which was shot this week. However, the Wall Street Journal reported that the head of state has ordered a strike against Tehran, but later canceled it. This further increases the likelihood of escalating the tensions in the Middle East, where is produced over 20% of the world oil.
Potential supply problems have boosted raw material prices, coupled with the weakening of the US dollar after the Fed hinted for the interest rate cuts.
According to the analysts, the volatility in oil prices is likely to remain, but the upcoming OPEC meeting on July 2 will give the market the much-needed breath.
On Wednesday, OPEC decided that the next meeting with its allies, including Russia, would be held on July 2, a day after the regular monthly meeting of the cartel. The decision on the meeting, which is supposed to discuss the question of the possible continuation of the quota deal, was taken after weeks of disputes and uncertainty about target price.
The crude oil prices are getting strong support from the EIA report for the surge in gasoline demand as the summer driving season kicks into high gear. Demand was a record for the weekly data, at 9.9928 million barrels per day last week. That is up from the 9.3 million barrels per day drivers used a year ago. It was also up from 9.877 million barrels per day last week.
US Crude oil inventories
The US crude oil inventories decreased during the week ending June 14, according to the official report of the US Energy Information Administration (EIA).
The commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 3.1 million barrels from the previous week. At 482.4 million barrels, the stockpiles were about 7% above the five-year average for this time of year.
According to the EIA, total motor gasoline inventories decreased by 1.7 million barrels last week and were about 1% above the five-year average for this time of year. Finished gasoline and blending components inventories both decreased last week.
Distillate fuel inventories decreased by 0.6 million barrels last week and were about 5% below the five-year average for this time of year. Meanwhile, the propane/propylene inventories increased by 3.3 million barrels last week.
US rigs count
The US oil and gas rig count dropped 13 to 1,040 week on week, according to the data of S&P Global Platts Analytics, continuing a seesaw behavior that has characterized domestic unconventional activity since oil prices plummeted late last year.
The oil-directed activity was the hardest hit, down 10 rigs to 832, while gas rigs slid by 2 to 204. Also, a one-rig decline was seen for rigs not classified as oil or gas.
In the US’ largest plays, the Permian Basin of West Texas/New Mexico posted the week’s biggest loss — down 14 rigs to 434. All other basins either remained steady or were up or down a rig or two each versus last week.
The rig count hit a recent peak in mid-November of 1,233 but has since slid. Since February has stayed below 1,100. In recent weeks it has swung between modest gains and losses each week, generally trending south.