Oil Prices Double From February Lows

Between Doha hopes (and nopes), Nigerian supply ‘disruptions’ which apparently cannot be stopped (conveniently for many oil producers, equity bulls, and central bank inflation watchers), and non-transitory Chinese ‘demand’, WTI crude has topped $51 today – almost doubling off the February lows. While still down year on year, oil prices have recovered to 11-month highs, soothing credit-driven anxiety in markets (even though bankruptcies continue) and enabling hedgers to pile in (crushing the crude curve). With rig counts rising once more (and global GDP being slashed), one questions how sustainable this frothy bounce will be…

A larger than expected inventory draw from API last night sparked the latest impulse…

(Click to enlarge)

Along with China trade data, sending WTI to 11-month highs…

“The market sentiment is positive; the trend and the momentum points to further gains,” said Carsten Fritsch, commodities analyst at Commerzbank. As Reuters reports, supply disruptions caused by a string of attacks by the Niger Delta Avengers militant group in Nigeria have brought the oil exporter’s production to its lowest level in 20 years.

Related: India Putting Floor Beneath Oil Prices As Demand Continues To Soar

The group said on Wednesday it had attacked another oil well owned by U.S. oil group Chevron, adding to assaults on oil infrastructure owned by Shell and ENI.

Nigerian Oil Minister Emmanuel Ibe Kachikwu said output had dropped to 1.5-1.6 million barrels per day (bpd), down from 2.2 million at the start of the year.

At the same time, May trade data on Wednesday showed the biggest jump in China’s crude oil imports in more than six years, adding to hopes that the economy of the world’s second-largest oil consumer may be stabilizing.

“China’s economic activity is not slowing down as much as expected, which is a support to the market,” said Kaname Gokon at brokerage Okato Shoji.

With all eyes on today’s DOE data with regard to production, we will see how long $51 will hold.

Source: http://oilprice.com/

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