Oil prices grew more than $1 to set new 2015 highs on Wednesday, perpetuating a month-long rally which has been backed by a weaker dollar and a severance to crude exports from Libya.
Oil traders have pushed prices up this week, after a rally of 25 percent for U.S. crude prices in April and 20 percent for Brent oil, despite clues that the Organization of the Petroleum Exporting Countries (OPEC) could keep production unmodified at actual high levels at a meeting next month.
Brent crude increased by 97 cents to $68.49 a barrel, after setting a 2015 high of $68.67. U.S. crude was traded $1.10 higher at $61.50 a barrel, near a top of $61.69.
“We haven’t seen hedge funds and money managers to be as optimistic and bullish as they are currently. They are at their most bullish since July last year, when the oil market fundamentals haven’t really changed that much,” explained Vyanne Lai, an oil analyst with National Australia Bank.
She explained that given increased geopolitical risks in Yemen, money managers were “using the volatility as an excuse to speculate the oil prices higher”.
In Yemen, Saudi forces, conducting an Arab alliance involved in a campaign, mostly consisting on air strikes, on the Iranian-allied Houthis, have bombarded the Yemeni side of the border just after the Shi’ite fighters fired several shots towards Saudi territories.
Saudi Arabia is the largest oil exporter in the world.
In Libya, protests have stopped crude flows to the eastern port of Zueitina. Libyan output is currently below 500,000 barrels per day, a third of what the country pumped before 2010.
Oil prices also gathered support from the dollar that is going towards a fourth weekly loss against other top currencies, but also after an industry study which announced U.S. inventories dropped 1.5 million barrels last week, for the first time in 2015, compared to experts’ expectations for a 1.5 million barrel build.
“Depending on how production figures turn out, the new highs could be tested again. If production drops below 9.3 million barrels a day, we find it very likely that prices would break this and end off at $62.33 and $69.11 for WTI and Brent,” said Phillip Futures Energy analysts in a statement on Wednesday.
The U.S. Energy Information Administration will announce official stockpiles data on Wednesday.
The recent instability of oil prices has made it very difficult for governments, companies and even drivers to set clear budgets.
Image Source: Sweet Crude Reports