Crude oil prices are soaring back after getting smashed on last week’s stock market correction. Of course, all the selling in stocks and oil are not about what is happening now but what may or may not happen in the future.
Crude oil prices are shaking off the stock market turmoil and now focusing on a surprise drop in weekly supply, as reported by the American Petroleum Institute (API). Yet, with the rebound in stocks and a reduction in fear and turmoil, why wasn’t oil higher? Well, perhaps because of a report from the EIA that will rock the world as we know it.
War is over if you want it to be, President Donald Trump said in his State of the Union address on Jan. 30, where he once again declared, “We have ended the war on American Energy and we have ended the war on beautiful clean coal. We are now an exporter of energy to the world, as well as stating that the era of U.S. economics surrender is over.”
Commodities are on fire as the economy in the U.S. leads the world in a commodity consuming growth period. Lumber surged to all-time highs and industrial metals are strong as manufacturing and factory growth around the globe is strong. Crude oil prices are pulling back after a rise in the rig count even though it’s making up for lost time after the big freeze down south.
Commodity prices were on fire on Thursday morning, still soaring after comments by Treasury Secretary Steve Mnuchin that the weak dollar was good for the U.S. economy. European Central Bank President Mario Draghi then weighed in and seemed aghast at the remote possibility that someone in a high governmental position might make a comment to weaken their currencies.
Crude oil prices are consolidating as the global economic forecasts are driving demand expectations higher as U.S. oil inventories continue to plunge. After a record one-week drop in supply last week at Cushing Okla., the market is getting ready for yet another steep drop at that point. This comes as the International Monetary Fund (IMF), in its World Economic Outlook released yesterday, is reporting that U.S. tax cuts will ramp up investment not only in the United States but among its trading partners.
Now you see it. Now you don’t. Presto, change-o the U.S. oil glut has disappeared. Low crude prices and a booming global economy have caused the biggest oil glut in history to disappear before your very eyes. The American Petroleum Institute reported another massive 5.121 million barrels drop in U.S. crude supply dragging stockpiles back to the lower end of the average range for this time of year.
The crude oil glut that many said would never go away is officially gone. For the first time since June of 2015, oil supplies are back in the average range and not above average. This is happening as U.S demand is above average and that in part explains why the supply of oil continues to drain at the fastest pace in history.