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Crude Oil Pares Losses, Uncertainty Remains

May 19, 2016 at 19:29 by Andriy Moraru

The price of Brent crude oil is up slightly after falling 1.1% on the New York Mercantile Exchange on Thursday as US crude supplies increased by 1.3 million barrels last week. Despite the slight recovery, prices remain down from the Wednesday morning high of $48.63 per barrel.

Oil tumbled on Wednesday and early Thursday after weeks of steady gains, part of a rally which has seen oil recover from its 2016 low of $26.21.

The increase in crude oil inventories reported yesterday surprised analysts, who had anticipated a 1.1 million barrel decline. While the increase in US crude supplies was the main factor driving this week’s decline in crude, other factors contributed as well. Analysts point to the recent US dollar rally as a contributing factor, as global oil prices are USD-denominated.

Other factors impacting the recent decline in oil prices include an unsustainable rally in recent months, which BNP Paribas analysts described as “too high, too far, too soon.”

Analysts expect US oil supplies to increase in the coming years as innovations in hydraulic fracturing have made hard-to-reach wells accessible. Additionally, the the oil market is affected by the terrorist threats in Nigeria, which have destabilized oil supplies from that country.

Brent oil was trading at $48.76 per barrel on NYMEX as of 19:22 GMT today after reaching a daily low at $47.37 per barrel.

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