Oil Near One-Week High

U.S. crude stockpiles probably have decreased by 750 000 barrels last week as refineries have increased their output, spurred by increased demand before Memorial Day. The holiday marks the american peak driving season ending in September. The U.S. Crude Oil Inventories report, scheduled for release tomorrow by the Energy Information Administration, will bring some light into oil demand and will influence oil prices.

Victor Shum, the vice-president at IHS Energy Insight, said for Bloomberg: “Oil is likely to stay quite steady. If U.S. inventories turn out to be falling, then that should help support pricing.”

Gasoline supplies are expected to have decreased by 650 000 last week and distillate inventories should have risen by 150 000 barrels.

WTI for July delivery settled at $95.36 a barrel on Tuesday, up 1.29% on the day. Prices were supported by the positive economic U.S. data that was released yesterday. The S&P/Case-Shiller Composite-20 Home Price Index rose to 10.87% in March, compared to the revised value of 9,32% in the preceding month and way above the 10.2% forecast. The Conference Boards Consumer Confidence Index (CCI) rose unexpectedly to 76,2 for May, compared to a revised 69 for April and exceeded the forecast of a value of 71.

Consumer confidence is a critical factor for the U.S economy as consumers account for around 70% of GDP. The U.S. is the biggest oil consumer in the world and accounts for 22% of the global oil consumption, which means that every shift in U.S. economy sentiment would cause oil prices to fluctuate up and down.

David Lennox, a resource analyst at Fat Prophets in Sydney, said for Bloomberg: “We’ll see what the inventory reports look like during the week and that will tell us just how the U.S. consumer is really traveling. The market is also likely to focus on the upcoming OPEC meeting and the early noise coming from there is that there will be no change.”