As a result of supply disruptions, and increased demand for oil, the price is set to reach its highest weekly gain since mid-January.
The weaker dollar has also increased demand for this commodity.
The dollar’s weakness makes goods priced in greenbacks cheaper for buyers overseas.
Oil gains this week despite Friday’s losses.
On Friday, benchmark contracts declined due to uncertainty about trade flows and US Tariffs.
The price of West Texas Intermediate Crude Oil was $71.86 per barrel at the time this article was written, down by 0.8%.
Brent crude oil traded on the Intercontinental Exchange fell 0.8% to $75.87 per barrel.
This week, there were some impressive gains
Brent crude and WTI oil have both experienced significant gains this week. Each has gained approximately 2%.
The two benchmarks have seen the largest weekly increases since January.
Brent crude’s positive trend marks a second week in a row of gains after a three-week period of losses.
WTI crude, on the other hand, is set to make its first weekly gain after four weeks of consecutive losses.
The recent surge in oil prices could be a sign of a shift in sentiment on the market and a recovery.
It remains to be determined whether the upward trend in oil prices will continue over the next few weeks. Various factors such as geopolitical events, economic conditions worldwide, and demand-supply dynamics continue to affect crude oil.
David Morrison is a senior analyst and market researcher at Trade Nation.
Overall, the picture is more optimistic than in recent months. Oil may have reached an intermediate bottom after dropping 12% since its mid-January high.
Supplies disrupted
According to Russia, a drone attack by Ukraine on a pumping facility on Tuesday caused oil flow through the Caspian Pipeline Consortium(CPC) to drop 30-40%.
CPC has been a main route of export for Kazakhstan crude oil.
Reuters reported on Thursday, despite the damages to this important export route that Kazakhstan was pumping oil at record levels.
It is unclear how Kazakhstan managed to achieve this.
According to the Energy Information Administration, the US gasoline and distillate inventory fell by a record amount last week.
In a recent report, Arslan A. Ali, an analyst with FXempire said that the market reacted to falling stockpiles, as refinery repairs limited processing capacities, helping support expectations for robust demand.
Resumption possible of Iraqi exports
The Iraqi Oil Minister announced Monday that the semi-autonomous Kurdish region in Northern Iraq will resume oil exports soon, meaning more oil could be coming to the market very shortly.
According to a report by Commerzbank AG, at the Munich Security Conference held over the weekend, Prime Minister Kurdish Provincial Government of Kurdistan spoke about the resumed exports before the end of march.
A dispute regarding marketing rights, and the decision of a court of arbitration in the matter has caused the oil supply via the pipeline into the Turkish Mediterranean Port of Ceyhan to be interrupted since almost two years.
Carsten Fritsch said that the resumption would lead to an increase in Iraq’s oil supplies by 300,000 barrels per day, ceteris paribus, and create a new problem.
Iraq’s commitment under the OPEC+ Agreement, which restricts its oil production at 4 million barrels a day, is responsible for this.
Fritsch said:
Iraq cannot increase its oil production without violating the production limit.
Some market talk also suggested that the Organization of the Petroleum Exporting Countries (OPEC) and its allies would extend their oil production cuts beyond March during the upcoming OPEPC meeting.
It would be a positive for oil prices if cartel delayed its plan to unwind gradually the voluntary production cuts of 2.2 millions barrels per days.
Last year, the group extended this cut multiple times.
The post What’s Driving the Rally? – Oil Prices Set for Biggest Weekly Gain Since January appeared first on Oil Price News. This post may change as the updates unfold
