If you haven't heard today's big news by now, both the price of Brent Crude Oil and West Texas Intermediate ("WTI") Crude Oil exceeded $50 per barrel for the first time in 2016 today, before sliding back down to close just below the $50 mark.
According to Bloomberg Energy, Brent Crude closed at $49.40 per barrel and WTI Crude closed at $49.32 per barrel.
What is the cause of the price of oil hitting $50 per barrel today?
- Bloomberg reports that "U.S. stockpiles shrank more than expected last week...while supplies have also been curtailed in Nigeria, Venezuela and Canada."
- The Wall Street Journal agreed with those supply considerations, but cited the following several additional factors: (1) waning North American output helped drain a massive overhang in U.S. stockpiles; (2) China's rising oil imports and the rise of independent Chinese refiners; and (3) fuel consumption rising in India
- Oil & Gas Journal also referenced another potential cause – that "[p]rices were also bolstered by a weaker U.S. dollar, which declined 0.2% in the Wall Street Journal Index."
How long are analysts predicting this rally to last? Are analysts bullish or bearish on oil?
- The Wall Street Journal reported today that "analysts appear unable to reach consensus as market offers opposing hints to oil rally's potential."
There appear to be analysts in both camps and even some folks on the fence – predictably, no one is making any guarantees about what the price of oil is expected to do.
The Wall Street Journal reported the following: "Many analysts cite strong demand from major emerging countries such as China and India, coupled with supply constraints on many main producers in the Middle East, as a reason to remain bullish on oil. However, those in the "bear" camp reckon there is still plenty of global supply that could potentially come on line, with a number of U.S. producers of shale oil ready to step up production as prices rise. The return of thousands of barrels of crude onto global markets from Iran is also helping keep oil plentiful."
The Wall Street Journal article summed it up nicely with the following quote: "The brave new world of petroleum promises to be volatile and the 'new normal' for oil prices makes stability elusive," analysts at Citi said in a report.
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