Published On: Wed, Apr 29th, 2015

After First Stock Draw In Five Months Oil Prices Hit Their Highest

Saudi Aramco

Pictures from Saudi Aramco where they have recently announced a change of management.

Oil prices have hit their highest point this year on Wednesday after the first crude stock draw in the last five months took place in Cushing, Oklahoma, United States. The hub in Oklahoma may be suggesting that the oil troubles are starting to ease. Government data which shows a smaller than expected rise in crude inventories during last week across the whole of the United States of America also aided sentiment, even though some of the traders felt that the market is ignoring bearish elements such as higher production. Oil has showed the highest recovery during this month since the fall which began in June of 2014.

The United States crude futures are on track to end April up almost 23%, which is the biggest Monthly increase since May of 2009 when the global economy started to recover from the financial crisis. Prices jumped by 2% during trading on Wednesday, with early increase caused by a leadership change which was announced by Saudi national oil company Aramco. The rise in prices was caused partially by the higher demand for crude oil. Government data has shown that the United States crude inventories rise which happened last week was a record high for the 16th straight week. The build up of 1.9 million barrels was smaller than the 4.2 million barrels estimated by the American Petroleum Institute. The crude stocks of Cushing, which is the delivery point for all of the United States crudes, fell by the number of 514,000 barrels, which is the first decline that has happened since November. Weekly production of United States crude also rose by a slight amount. The stocks at Cushing finally showed a drawdown because of the stronger refinery demand, and this is very encouraging because many fear that the capacity for storage could be overwhelmed.

In spite of all this Gene McGillian from Stamford’s Tradition Energy in Connecticut stated that the market is learning to adjust and to respond appropriately, like ignoring increases in production to focus on the smaller builds and draws. The United States crude futures have closed up $1.52 at $58.58 per barrel after reaching the 2015 high of $59.33. Brent crude futures, the benchmark which can be used more widely finished up $1.20 at $65.84 after hitting its year high of $66.72.

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