US oil production likely to decline

Oil prices climbed by 3.5% yesterday and continued to rise in the early hours of this morning. At its peak, Brent was trading at $66 per barrel, while WTI reached a good $61 per barrel. There were hardly any real reasons for the robust price increase, however, which began in the late morning without any obvious trigger. 

The US Energy Information Administration slightly increased its demand forecast in the evening by 20,000 barrels per day and expects US crude oil production to decline from June until well into next year - previously the decrease was only supposed to continue until September, notes Commerzbank. 

US crude oil production next year also looks set to fall again year-on-year for the first time. On the other hand, the absolute level of US crude oil output was increased by 200,000 barrels per day for this year and by 100,000 barrels per day for next year. This is due to a significant upward revision for the first quarter of 2015. 

Late in the evening, the API reported a surprisingly pronounced 6.7 million barrel reduction in US crude oil stocks last week, which was additionally accompanied by a decrease in crude stocks at Cushing and in gasoline stocks. The US Department of Energy will be publishing the official inventory data this afternoon. The API's data have not been very meaningful of late. 

Reports that Saudi Arabia had only stepped up its oil output in response to higher demand was likewise interpreted positively by the market. That said, this ignores the fact that Saudi Arabia is thus preventing any reduction of the oversupply. No fundamental justification for the current price rise is seen, which is believed to be primarily driven by sentiment and momentum, states Commerzbank.