U.S. crude oil stocks fell 4.1 million barrels
Crude oil prices continued to rally today after taking a dive following the Brexit vote last week.
Investors fleeing the pound sterling strengthened the dollar and yen substantially, creating downward pressure on oil prices earlier this week, but data from the EIA today showed a larger than expected crude oil inventory draw, which is helping boost oil prices for a second day in a row.
U.S. commercial crude oil inventories decreased by 4.1 million barrels for the week ended June 24, 2016, according to the EIA. Crude oil inventories remain elevated at 526.6 million barrels, but the recent draws in the inventory have given investors bullish hopes that demand may be outpacing the current supply of oil, helping to work off the current glut.
WTI crude oil was up above $49 per barrel today after falling from above $50 to below $46 per barrel in just four days.
Strikes in Norway may take more production offline
Adding to the bullish sentiment in the markets today, it appears that up to 7,500 Norwegian oil and gas workers could go on strike Saturday. The workers are demanding a new wage deal before midnight on July 1. Negotiations between Norway’s oil companies and the industry’s biggest union fell apart in less than a minute earlier this month, highlighting the divide the two groups need to bridge before the weekend to avoid a strike.
Norway’s oil producers are hoping to change the model for wage increases for offshore workers, which is separated from economic fluctuations like the downturn in oil prices. Neither oil companies nor rig owners offered a wage increase, while the unions want to negotiate based on a benchmark accord between employers and workers in export-exposed industries reached earlier this year.
Like much of the rest of the world, low oil prices have taken a substantial chunk out of Norway’s budgets. According to the Norwegian government, the value of the country’s state-owned oil and gas fields fell 34%, or $50 billion, after oil prices dropped starting in 2014.
Norway produced 1.96 MMBOPD in May, or about 2.1% of the world’s oil output, according to the IEA. The EIA believes the market is oversupplied by about 0.5 MMBOPD at the moment, so a sharp decline in Norwegian production could serve as the final push in bringing oil supply and demand near parity.
