Mixed news drove crude oil prices in both directions this week before traders decided the way of least resistance was up.
On the bullish side, the market was supported by U.S. Energy Information Administration remarks from earlier in the week calling for U.S. crude oil production to rise by less than previously forecast next year due to a lower price outlook.
Weekly U.S. government inventories even fell more than expected.
Saudi Arabia’s threat to reduce exports in August was also seen as a potentially bullish development. Early Thursday, reports of strong demand from China eased concerns of an ongoing fuel supply overhang.
Limiting the upside was rising U.S. production, steady growth in producing oil rigs and increasing production in Libya and Nigeria. Late in the week, the International Energy Agency even warned the oil market could stay oversupplied for longer than expected due to rising production and limited output cuts by some members of OPEC.
Several banks issued bearish forecasts with Goldman Sachs saying prices could fall below $40 if the market doesn’t get a clear catalyst to buy. The catalyst could be further intervention by OPEC or a steady drop in U.S. crude stockpiles and the nation’s rig count, the bank said.
Bullish traders didn’t seem to mind the two-sided trade and as of Thursday’s close, it looked as if they had shrugged off the negative news, choosing instead to let the price action dictate…