Here’s what happened:
- On Friday last week, Brent Crude increased by 0.8% to $40.39 a barrel.
- And West Texas Intermediate (WTI) also increased by 1.7% to $38.50 per barrel.
- According to the International Energy Agency, the I.E.A, there are now signs of stability within the oil markets and also cautious optimism for price increases in the near future.
Have oil prices finally hit rock bottom?
Let’s look deeper into what’s going on with oil
- Crude oil prices plunged by 37% since May 2014 and even fell under $28 per barrel during the first month of this year.
- Markets were over supplied during the last few years from a boom in U.S. crude oil production thanks to the popularity of fracking.
- At the other side of the trade chain, China (the world’s second largest commodities consumer) significantly decreased its crude oil demand and magnified worries for global slowdown in economic growth.
- But according to a report released by I.E.A on Friday, during February there was a reduction of oil output by 180,000 barrels per day to 96.5 million barrels per day – from both OPEC and non-OPEC producers.
- Given that it is responsible for the coordination of the energy policies of oil producers, the IEA estimates that the production from non-OPEC nations might fall by 750,000 barrels per day this year. It revised its initial estimate of a reduction of 600,000 barrels.
- Meanwhile, in the United States, the world’s largest crude oil producer, it is also estimated to cut supply during 2016 by 530,000 barrels per day.
So what is next for oil?
- Again, the I.E.A see the oil market heading towards some long-awaited stability by 2017.
- And demand in China might grow by 330,000 barrels per day.
- Regardless of what happens, we’re likely to see continued volatility within the crude oil markets, and that is good news for short term traders looking to take advantage of sudden price moves.
- Later today, we’ll be looking out for Crude Oil inventories due at 3.30 this afternoon, GMT time.
Other market-moving announcements to keep an eye on this week include:
- The FOMC meeting with a summary of economic projections and a press conference by Chair Janet Yellen, also out later today at 7pm GMT.
- On Thursday the Bank of England Meeting announcement comes out at 1.00pm
- And hot on its heels comes the all-important US Unemployment claims at 1.30pm.
We’ve got a busy week ahead, be sure to keep an eye on our financial calendar.