Oil prices came charging out of the gates early this morning as prices continued to build on last week’s gains. Investors have seemingly piled back into the markets after the latest data from the Energy Information Administration (EIA) showed U.S. stockpiles grew at a poor pace compared to the start of the year. This past week stockpiles only grew by 1.3 million barrels compared to the projected 3.5 million. This occurred thanks to a steady drop in the number of U.S. rigs digging for crude, which clearly indicates that there will be a lower supply later in the year. This is decline is a record setting 19th straight week for the U.S. oil drilling, the lowest since 2010.
Although this week’s drop was not as heavy as was anticipated, perhaps implying that the collapse in drilling may be coming to a halt, many feel that an eventual recovery in U.S. oil drilling may never yet again reach or eclipse last year’s feverish pace.
Additionally, China’s latest stimulus measure certainly strengthened the market demand for oil as China introduced a stimulus measure in order to jumpstart their seemingly troubled economy. China’s central bank on Sunday decided to limit the amount of cash in which banks must hold as reserves.
There are those who believe that despite the decline in the amount of U.S. oil, prices will only reach the mid $60s and mid $70s for crude and brent oil respectively because the global oil market is well supplied.
This upcoming week promises to be quite telling as on Tuesday, April 21 the American Petroleum Institute will publish its weekly report on oil supplies. On Wednesday 14:30 GMT the EIA will give its weekly report concerning the U.S. oil inventories.