Oil Inventory Build Leads Towards Oil Sheds Gains

Crude oil futures showed gains during late Tuesday (January 27) since crude oil inventories showed larger builds, based on a report issued by the Wall Street Journal. The oil inventories in the US grew by around 11 million barrels in just 7 days. We thus have a huge build caused in part by refinery maintenance season. In the future weeks, we expect this to continue and prices can easily go up, creating wonderful investment opportunities for those interested.

Basically all crude oil price forecast reports are currently positive and we saw an increase in oil price of 6%, which is more than what many expected to see.

The countries that are big players in the oil industry are playing a huge part in the price rise. Russia is currently resisting the indications of the Petroleum Exporting Countries Organization to cut supply. Other countries are currently flexible, including non-OPEC producers and Saudi Arabia.

Output reduction at the moment is necessary, just as it had been for over one year. We do not know what role the countries will play in the future but until there is a deal that is set up, oil prices are not going to naturally rebalance. The market is volatile and this will continue till then.

Oil prices showed a slide of around 20% this year alone. The major producers from OPEC did not cut back on the investment plans. We see many that do want to boost the supply because of a wish to increase physical inventory counts and profits.

In the event that an agreement is made between the oil brokers, it is expected that we have a barrel price that will be of around $50, according to PVM oil broker David Hufton. The current rally that was seen is limited because of oil prices being pressured through Asian stock weaknesses. Global economic slowdown is currently feared after the second oil consumer in the world, China, highlighted a rail freight volume drop of 11.9%.

During this week we can safely expect a storage fall through the work of the Canadian oil sands producers as they cut output. That will be the case even if supplies are increased.

US commercial gasoline and crude oil inventories most likely rose during lasts week and distillate stocks will most likely fall, according to the Reuters survey that was recently released, even if it is preliminary. The traders are currently going to be interested in knowing all that they can about the impact of the US dollars on world economy and will be on the lookout for various different statements made by people responsible for the oil industry prices. Dollar strength did have a huge effect on oil prices. Fuel becomes a lot more expensive for the countries that use different currencies. This will most likely continue if the dollar is still strong.

If you want to buy oil, it is the right time to do so. Prices are going to increase but you have to be careful and be on the lookout for signs that this trend may stop.