U.S. West Texas Intermediate is in a position to post a strong gain this week. The short-term fundamentals continue to be supportive as bullish traders remain concerned over the escalating military activity in the Middle East and shrinking global oil inventories.
Earlier in the week, crude oil surged to the upside after Saudi Arabia said it intercepted missiles over Riyadh and U.S. President Trump warned of military action in Syria.
In another bullish development on Thursday, OPEC said that a global oil stocks surplus is close to evaporating. The cartel supported its claim by saying it was based on healthy energy demand combined with its own supply cuts. Furthermore, it revised up its forecast for production from rivals who have benefited from higher oil prices.
Additionally, OPEC Secretary-General Mohammad Barkindo told Reuters in an interview that OPEC and its oil producer allies are poised to extend their supply-cutting pact into 2019 even as a global glut of crude is set to evaporate by September.
In other news, the U.S. Energy Information Administration said U.S. crude inventories rose by 3.3 million barrels to 428.64 million barrels. Additionally, U.S. crude oil production last week hit a fresh record of 10.53 million barrels per day (bpd), up by a quarter since mid-2016. The rise in production means the U.S. now produces more crude than top exporter Saudi Arabia. Only Russia, at currently just under 11 million bpd, pumps out more.