Oil prices increases sharply

There is still no plausible and convincing explanation for yesterday's steep oil price increase which saw WTI surge by over 6% or $3 and Brent by nearly 5% or over $2 per barrel. The US inventory data cited by the media can be pretty much ruled out as a viable explanation - for one thing they offered virtually no new indications, and for another the lion's share of the increase already happened before they were published. 

It is possible that the surge was sparked by a large-scale buy order or computer trading and was then exacerbated by technical follow-up buying. What is striking is that not even the immense strength of the US dollar - the EUR-USD exchange rate fell by 1.7% yesterday evening after the Fed's meeting - was able to reverse the price rise. This could suggest that many market participants regard the price rise as fundamentally justified. 

Similarly strong counter-reactions to previous price falls were also observed for example at the end of August and in early October. At least the current news from oil companies points to rising prices in the longer term. "One man's sorrow is another man's joy" would be one way to describe the current situation in the oil sector.

"For the problems faced by US shale oil producers and the losses incurred by leading conventional oil producers will result in a massive cut in investment. At least this will seriously put the brakes on production growth in the coming years", says Commerzbank.