Oil is currently traded at $59.57/barrel at 5:11 pm GMT+7.
Oil price is likely to decline because of the following reasons:
- Oil prices remained under pressure from oversupply. According to the Bloomberg survey, OPEC is likely to maintain production in the next meeting on 5th June. Currently, the output of Iraq and Saudi Arabia is going up, increasing OPEC production by 67,000 barrels to 31,579 million barrel per day (bpd) in May 5. But US production increased to 9.57 million barrel per day in the period ended in 22nd May, the highest level since March 1983.
However, oil price may bounce back because of the following reasons:
- Some speculators will buy oil when at current price to get profit when price recover. Oil bullish bets reached its highest level in 3 weeks. According to the CFTC, the number bullish orders on WTI oil futures rose for second week.
- Middle East hostilities: Baiji oil refinery (producing 1/3 of domestic fuel supply) of Iraq was destroyed by the IS. Unrest in the Middle East is considered a supportive factor for oil, however, at present it is not significant in comparison with global oversupply.
Forecasting: Oil price may decline to $58.02/barrel.