July crude oil futures crossed to the strong side of $50.00 per barrel on May 26, but traders apparently didn’t like the view since the market settled twenty-five cents lower. Early in the session, one headline read, “Crude Oil Tops $50 as Supply Worries Subside”. Later in the day after prices weakened, the headline read, “US Oil Settles Under $50 as Supply Worries Resurface”. So I have to conclude that $50 is the magic number that separates the bulls from the bears.
Longer-term traders cite the global supply glut as one reason why prices are unsustainable over $50.”At 537.1 million barrels, U.S. crude oil inventories are at historically high levels for this time of year,” the Energy Information Administration (EIA) said in its weekly status report.
This week’s U.S. Energy Information Administration’s weekly inventories report was somewhat bullish as U.S. crude supplies fell 4.2 million barrels, more than the 1.7 million barrel estimate. Gasoline supplies, rose however.
The EIA report also showed that domestic oil production in the lower 48 states fell by 20,000 barrels a day to 8.265 million barrels a day.
Fifty dollars a barrel has long been thought of as the price that would entice producers to restart closed rigs. We may have seen evidence that we are close to this happening. On May 20, Baker Hughes released its weekly U.S. crude oil rig count. It was unchanged at 318 rigs for the week ended…