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Oil Down at Open Thursday on Profit-Taking

Oil worker

Following three sessions of gains, oil prices dropped a bit Thursday, but the price drop is being credited to traders drawing off profits following earlier sessions.

The drops were not dramatic and prices remained at least close to the peaks that have been brought on by a drop in inventory in the U.S. and disruptions in supply elsewhere.

Michael Hewson, a CMC Markets analyst, commented that energy prices were still above $50 per barrel and that the momentum remained positive. He also attributed the price drops to profit-taking.

Oil prices saw a spike Wednesday. That uptick came on the heels of an EIA report that showed US crude stocks dropping to 532.5 million. It was the third fall in as many weeks.

The weaker dollar continues to bolster oil prices. The dollar has dropped down approximately 2.4 percent for the month of June, making it cheaper for countries using other currencies in terms of dollar-traded fuels.

Despite the fact that Brent has rallied six times in June, some analysts continue to contend that the rise in oil prices is “overblown”.

ANZ bank commented that the rises were “tempered by an increase in (U.S.) crude production of 10,000 barrels per day to 8.75 million barrels per day and the number of active rigs increasing by 9 to 325.”

Related: Shell Unveils New Strategy: ‘Leaner and Deeper’

Others note that $50 to $60 per barrel may indeed constitute a fair price, basing that assessment on the forward curve of Brent crude.

On Thursday morning, international Brent crude futures were trading at $52.38 - a drop of 13 cents. That price was down from an earlier high of $52.86.

U.S. crude (WTI) fell slightly from $51.67 to $51.20.

Lincoln Brown for Oilprice.com

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