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Geopolitical Worries Push Oil Prices Up Despite US Stockpile Increase

April 26, 2018 at 17:04 by Matt Jackson

Despite yesterday’s dip, and news from the EIA that there had been an increase in crude oil stockpiles, oil prices have managed to maintain slight upward momentum today, as geopolitical concerns weigh on the minds of investors. Specifically, it was hinted that President Trump might consider a revised deal on Iran’s nuclear program but his cryptic messages that followed this suggestion have cooled beliefs that a deal is likely. As a result, WTI crude posted a slight loss of 0.19% while Brent crude rose 0.38% on the day’s trading.

The USA Energy Information Administration (EIA) produced their weekly report of US stockpiles yesterday. Despite expectations that there would be a reduction in the amount of oil the country has, the EIA reported an increase of 2.2 million barrels for the week ending April 20. The news saw prices slip yesterday. Further reduction was expected during the day’s trading on Thursday. However, uncertainty over a new deal hinted at by French President Emmanuel Macron, appear to have fuelled a slight increase.

President Macron has met with US President Trump to discuss a number of political topics, including the Iran nuclear deal. Despite optimistic early exchanges, the French President has said that he thinks it unlikely that he has persuaded Trump to remain a part of the Iran deal.

The original deal was signed between the USA, UK, Russia, France, China, and Germany in 2015 but is set to expire next year. Trump has already voiced his concern over the deal, with political analysts suggesting he is likely to abandon the deal because of former President Obama’s close ties. If the USA were to pull out of the deal, and no new deal is signed, it would likely lead to considerable disruption in oil supply, and experts have predicted that a price of more than $80 would become more than just a desirable outcome for Saudi Arabia – it would become a reality.

The market has reacted to the seeming swaying of opinion by Trump, by buying more of the commodity and helping support prices. WTI crude ended the day down 0.19% at $67.92 per barrel. Brent crude, however, rose 0.38% to reach $73.51.

The recent increases in price have caused a stir around the industry, not just with investors. Major oil producer Shell has reported its highest quarterly profit since 2013 and pointed to the recent increases in gas and oil prices as being the primary driving force behind their performance.

If you have any questions and comments on commodities today, use the form below to reply.

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