Oil Update: $50 oil is back [BRENT $52.83 +0.6%, WTI $49.87 +0.3%]

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Oil prices touched their 2 month high as the prices for oil continue to rebound after a yearlong lag in the prices despite OPEC cuts.

Brent crude futures were at $52.82 per barrel at 0443 GMT on Monday, up 30 cents or 0.6 percent. Prices hit $52.90 per barrel earlier in the day, their highest since May 25.

U.S. West Texas Intermediate (WTI) futures were up 16 cents, or 0.3 percent, at $49.87 per barrel, and the entire WTI curve is close to moving back over $50 per barrel, with only September and October a notch below that level.

The prices have been gaining since the last six sessions, prices have risen around 10 percent since the last OPEC meeting, where the group and its members discussed the potential measures to tighten the oil supply.

The oil stockpiles at US are showing draw downs, tightening of oil supply from Saudi and OPEC members, adding to that the US consideration of imposing sanctions on Venezuela’s oil may well turn out to be oil supportive.

U.S. crude inventories have fallen by 10 percent from their March peaks to 483.4 million barrels.

Drilling for new U.S. production is also slowing, with just 10 rigs added in July, the fewest since May 2016. The declining prices have prompted the US producers form adding new rigs as the decline in demand continues to make the investments costly for the oil producers.

In a recent report by OilPrice, it informed that shale drillers are reducing their costs in an effort to hold further investment in the drilling. Whiting Petroleum (NYSE: WLL), the largest producer in the Bakken fields, said it would slash its 2017 spending by 14 percent.  Others are cutting spending, a sign that the recent downturn in prices are erasing any hopes of higher prices this year. The lower spending is also a sign that the shale boom is bumping up against its limits with oil at or below $50 per barrel.

Posted on: 2017-07-31T14:13:00+05:00

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