Crude oil prices have been fluctuating within a band. This was since the last couple of months driven by a bunch of positive and negative factors coming into play. But, investors may brace for further volatility in global oil prices due to various factors that are impacting the market.
Analysts believe that crude oil prices are likely to stay elevated in the short term amid supply concerns. It is due to a steep fall in US inventories and as production cuts by the OPEC countries begin to be felt.
US crude oil inventories shrank at their fastest pace in nearly six months over the past week. The data is from the American Petroleum Institute (API) pointed out.
The North American oil supply has already been squeezed by Canadian wildfire. Now, there are expectations of a surge in road trips in the US beginning with next Monday’s Memorial Day holiday. Both the contracts of crude oil have been rising in the run-up to the peak summer demand for travel.
“The sharp fall in US crude oil inventories, OPEC production cuts, increasing fuel consumption in the US, and Saudi Arabian energy minister’s warning against shorting oil, are all factors that are supporting the crude oil prices,” said Ajay Kedia, Director, Kedia Advisory.
The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia are expected to consider further output cuts at a meeting on June 4.
If you have further questions about the topic, feel free to contact us here.