Crude Higher on Lower Supply Expectations

Oil prices rose on Tuesday ahead of the release of the weekly US crude stocks on Wednesday. Last week oil inventories surprised markets with a 9.6-million-barrel drawdown and this week’s report could still show tightening supplies. Disruptions to supplies in Venezuela and another drawdown reported this week are boosting the price of the black stuff.

West Texas Intermediate graph

Venezuelan port Jose is still offline after electricity blackouts have forced operators to stop crude exports. US sanctions on Venezuela and Iran have combine with the efforts of the OPEC+ to keep prices from falling despite rising US production.

The balance between rising production in the US and the output cut agreement by OPEC+ broke in favour of higher prices as supplies are low when adding in the disruptions in Venezuela and Iran.

Brent crude graph

Recession fears have taken a back seat as prices are following demand fundamentals this week.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza