Brent25 Apr 2018 07:35
I'm bullish pmo but I can see risk of a pullback in Brent given disproportionate number of long positions plus over rapid rise in poo.
Market sentiment is turning increasingly bullish towards the commodity," said Lukman Otunuga, research analyst at futures brokerage FXTM.
Despite this, Otunga said "the sustainability of the rally is a concern" as it was fueled largely by political risk in the Middle East.
"With rising production from U.S shale still a key market theme that continues to weigh on oil prices, it will be interesting to see how much oil appreciates before bears enter the scene," he said.
With most U.S. producers now profitable at prices under $40 per barrel and the forward curve significantly higher than that for years to come, American drillers will likely continue to increase output as they are able to hedge themselves profitably for the foreseeable future.
U.S. crude oil production has already shot up by more than a quarter since mid-2016 to over 10.54 million barrels per day (bpd), taking it past Saudi Arabia's output of around 10 million bpd. Only Russia currently produces more, at almost 11 million bpd.
U.S. crude inventories rose by 1.1 million barrels in the week to April 20 to 429.1 million, according to a report by the American Petroleum Institute on Tuesday.
Official weekly U.S. fuel inventory and crude production data will be published on Wednesday by the Energy Information Administration (EIA).
"Should a larger than expected build occur in U.S. inventories, we can expect a swing in prices as markets have been shown to be extremely sensitive to weekly U.S. petroleum data," Singapore-based Phillip Futures said in a note.
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