“EIA reported that its crude inventories unexpectedly fell 4.98 million barrels (1.2 million above expectations). It also reported that supplies at the Cushing hub in Oklahoma, fell by a record 5.587 million barrels. Wednesday’s weekly EIA data showed that US crude oil inventories as of May 15 were up 10.1% above the seasonal 5-year average,” says Avtar Sandu of Phillip Futures, noting that this stemmed more from supply factors rather than a rise in oil demand.
SINGAPORE (May 21): In the wake of much publicised negative turn in oil prices, Maybank Kim Eng (MBKE) analysts predict a recovery in oil prices and oil-related stocks. Oil-producing nations have begun cutting production to adapt to severe oversupply while the lifting of lockdown measures will help increase demand going forward.
After entering negative territory in late April, oil prices have begun to correct upwards, with the Brent Crude oil index rising 18% to US$35.75 ($50.60) per barrel while the West Texas Index increased 27% to US$33.49. Agreed production cuts from OPEC+ have begun to take effect while demand for oil has increased in preparation for a post-lockdown economic jumpstart as US biotech firm Moderna announced promising early results for their vaccine tests. A weaker US Dollar and better performance on Wall Street have also contributed to oil price recovery.
