Crude-oil futures shook off earlier weakness on Thursday to tally a six-session gain of more than 12% as a smaller-than-expected weekly rise in U.S. crude supplies was seen as a possible sign of a slowdown in U.S. production. Traders also digested details of the latest monthly oil report from the Organization of the Petroleum Exporting Countries, which included expectations for an increase in demand for the oil the group produces.
May crude tacked on 32 cents or 0.6%, to settle at $56.71 a barrel on the New York Mercantile Exchange—a fresh high for the year. On Wednesday, prices climbed 5.8% after a U.S. government report showed a rise in weekly crude inventories that was less than half what the market was looking for.
On a technical level, Nymex oil prices broke through $55 Wednesday “to complete a big technical base” Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch in emailed comments.
The declines in oil prices earlier Thursday were a “common retest” of the breakout point and the retest was successful, he said. “The sellers have been cleaned out [and]…the uptrend is reasserting itself.”
OPEC decided not to cut production even though oil prices had been pushed sharply lower, ultimately suffering a decline of close to 50% for 2014.
But if sanctions on Iranian oil are lifted, Razaqzada says “we would be back to square one as Tehran would undoubtedly ramp up output and other OPEC members will likely maintain their existing production levels to defend their market