Boom, boom for oil? For a second session, oil prices have risen sharply. Are we seeing the return of the boom?
Not really, the rises merely reflect a retracement of the big falls of Monday and Tuesday when US crude futures went negative, weighed down by too many sellers and no buyers as the contract approached its expiration.
A tweet from President Donald Trump Wednesday raised tensions between the US and Iran, which put oil shipping in the Middle East at risk. But nothing happened.
Likewise claims by the President that he will organise help for the oil sector by buying oil for the US strategic reserve – without Congressional approval – came and went with no action.
But that didn’t stop June West Texas Intermediate oil jumping $US2.72, or 19.7%, to settle at $US16.50 a barrel in New York.
June Brent crude futures in Europe, the international benchmark, rose 96 cents, or 4.7%, to end at $US21.33 a barrel, after jumping 5.4% in the previous session.
The rise though reflected the market settling down after the chaotic trading at the start of the week.
News that the US saw another 4,4 million Americans make their first claims for unemployment benefits didn’t impact in the oil market, nor did the other major but of negative news, the ultra-weak and record lows for surveys of service sector activity in the US, Europe, the UK, Asia, and Australia while manufacturing surveys slumped to recession levels.
Traders said the war of words with Iran from Donald Trump should be discounted as it was merely another example of the rhetoric ‘war’ between the two countries.
Signs of a further drop in US crude oil production may also support crude prices, from a slowdown in fracking activity and sharp weekly falls in the active oil-rig count, to expectations of a May decline for all seven major shale oil output regions.
Oil rig use is down 126 in the past fortnight. US production is falling but stocks are still rising as demand continues to wallow at low levels.
