4 Factors Driving Oil Prices This Summer

Uncertainty is dominating today’s oil markets, with production cuts, ballooning inventories and a rising rig count all adding to oil price volatility. And as the summer driving season approaches and oil companies return to their projects here are four key factors to watch closely.
Inventory, Rig counts – An significant inventory build on the 7th of March sent oil prices tumbling, ending a period of relative stability for oil markets. The build-up of 8.2 million barrels at Cushing, Oklahoma sent prices below the psychological level of $50. The next week saw a draw of 237,000 barrels, providing the investors and market with some much needed breathing space. The most recent inventory report saw a 5-million-barrel build, adding yet more downward pressure to oil prices. The inventory level now rests at 533 million barrels, the highest in history. At the same time, we have seen a rapid increase in the number of active oil rigs in U. S. The total number now stands at 652 after an increase of 21 rigs last week according to Baker Hughes. This is the highest level since September 2015. Given the remarkable adaptability of shale producers to low prices, these trends are likely to continue, adding yet more downward pressure to oil prices.

This post was published at Zero Hedge on Mar 28, 2017.