US Oil Prices Rise Following Increase Of Demands Ahead of Summer Driving Season

Oil prices in the US have increased a little on May 31 ahead of peak demand during the summer driving season. However, prices of crude oil in the international markets have been decreased following increasing output in the Middle East, mostly serving the Asian Market. Price for crude oil futures of US West Texas Intermediate (WTI) has been witnessed at $49.50 a barrel at 0042 GMT which is 17 cents higher compared to that of last settlement.   

Demands for oil in North America are expected to increases with the official start of the US summer driving season this week. But the rising demand in the US is causing a cut in the open short crude positions. Outstanding short crude position of the US WTI has reached to its lowest level for this year during last week, reports Reuters.

Meanwhile, the international oil markets have been hit by an increased supply from the Middle East. Brent crude futures have been witnessed to be sold at $49.65 a barrel on the same day which is 11 cents lower from the last trading session, according to a report published in Irish Independent.

Members of the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna on June 2 to discuss a production cap. But analysts don’t expect for any decision on group’s production in tackling the oil prices. Amid such volatile situation, Iraq appears to be the latest Middle Eastern producer to increase its export level. Iraq is expected to supply 5 million barrels of additional crude to its partners during June, reports CNBC.

A study conducted by Vienna based consultancy JBC Energy suggests, global oil demand has been increased by 1.5 million barrels a day during the period of January- April. However, the rise in demand seems to be stronger than predictions driven up by stronger consumption in the United States, China and India.

On the contrary, US crude oil production has been reached to its lowest since September 2014 following cutting the number of rigs by the drillers ignoring recent increase in oil prices. But Suncor Energy has brought good news for the US oil industry through unveiling plan for increasing output at its fields of Alberta this week.

The Canadian oil company has been forced to shut down productions earlier this month following massive wildfire. Wildfires in Canada, unrest in Libya and Nigeria, all have contributed in pulling oil prices to a seven month high during recent weeks. Analysts predict for gradual increase in oil prices in the US market with further increase in demands which may help local oil industry to get a turn around in near future.