Although yesterday the US Department of Energy presented the data showing that oil reserves in the USA rose by 1.999 barrels in the week of 16-22 April (a week before that oil reserves rose by 2.080 million barrels), oil prices continue to rise. After the minor decline at the opening session today, the prices resume growth at the beginning of European session. Oil inventories according to US Department of Energy amounted to 538.6 million barrels last week, which was the record high for this time of the year.
Oil reserves in the US oil storages have reached historic highs of the past 80 years, exceeding the level of 500 million barrels.
At the same time Iran is increasing oil production and a meeting of the largest oil producing countries in Doha on 17 April did not bring any positive results.
Why do oil prices go up?
There are several reasons for this.
First of all the US Fed decision to leave interest rates unchanged. It seems that the US Fed worries less about economic situation in the country.
The second reason: gradual slowdown of oil production in the USA and recurring disruptions of oil supply in Nigeria, north Iraq and Venezuela. Recent strike of oil workers in Kuwait, which caused sharp decline in oil production and threats of delays in oil supply from this country, can serve as one of the examples.
The third reason for the rise in price is investors’ expectations of the obtaining the balance between demand and supply in the market in the next 6 months of this year. However, the rise in oil prices can tempt oil producers to increase production in order to secure its market share. In such case the supply will again increased the demand.
Therefore, further rise in the pair will be questionable if increasing oversupply will not be balanced by the rise in demand.