Crude oil is strong
On April 27, crude oil continues to trade higher due to positive sentiment surrounding the crude oil market. The strength in prices is due to hopes of rebalancing in 2016, the weaker dollar, and the American Petroleum Institute’s supportive weekly crude oil stock report. At 7:38 AM EST, West Texas Intermediate crude was trading at $44.88 per barrel—a gain of 1.9%. Brent crude was trading at $46.48 per barrel—a gain of 2%.
World Bank expects the Market to balance in 2016
In a recent report released by World Bank on the outlook for the commodities market, lead author John Baffes said that they expect better prices for commodities related to energy in 2016 as the Market rebalances after a period of oversupply. Citing this as one of the reasons, World Bank raised its forecast price for crude oil to $41 per barrel in 2016—a 10.8% increase from its 2015 projection of $37. It also added that the prices could fall if OPEC (Organization of the Petroleum Exporting Countries) nations increase the production and non-OPEC production doesn’t fall as significantly as expected. This is similar to Bob Dudley’s outlook for the oil market. Dudley is the CEO and director of British Petroleum (BP). It’s also similar to the report released by the International Energy Agency. Read What Does the IEA Expect from the Oil Market? to learn more.
API crude stock and weaker dollar
In addition, better-than-expected crude stocks data and the weaker dollar are supporting oil prices this morning. The data showed a sudden decline in crude oil stock to -1.1 million from 3.1 million in the preceding week. To learn more about how the weaker dollar is supporting crude oil, read Weak US Dollar Ups the Momentum in Crude Prices.
On April 26, oil producers QEP Resources (QEP), WPX Energy (WPX), Carrizo Oil & Gas (CRZO), and ExxonMobil (XOM) gained 5.7%, 4.6%, 4.70%, and 0.34%. The SPDR S&P Oil & Gas Exploration and Production ETF (XOP) gained 2.9%.