Oil Price - May 24

[dan_s]

The July NYMEX contract, which is now the front month, closed at $59.02/bbl on Friday, May 24. Part of the rebound was short covering as traders are worried about what Iran might do and the fact that U.S. drivers are going to burn up a lot of gasoline over the holiday weekend. Baker Hughes also reported another decline in the active rig count creating some concern that U.S. oil production has flat-lined. - Dan

OilPrice.com: Oil rebounded on Friday but it was not enough to erase the roughly 7 percent meltdown seen on Thursday. The trade war is starting to become a top concern to global equity and commodity markets. As of mid-day, WTI was trading above $58 per barrel and Brent moved above $67, somewhat mitigating what has otherwise been a dismal week. On the upside, the plunge in prices and the renewed bearishness undercuts the rationale for OPEC+ to increase production. “It is reasonable to doubt whether Saudi Arabia will be willing to step up its output given the latest decline in prices,” analysts at Commerzbank said. “We therefore expect to see higher oil prices again in the near future.”

MY TAKE: WTI is likely to move back over $60/bbl next week as we are now in the summer demand period when demand for transportation fuels spikes by 1.5 to 2.0 million barrels per day.