Crude Oil Hovers at 12-Month High

After a disappointing sell-off in April, crude oil has finally regained some positive momentum, although not necessarily for the most positive reasons. The fossil fuel is currently sitting at a 12-month high, as it finally broke through the triple-digit barrier for the first time since September of 2012. While the riots in Egypt have certainly played a role in the rapid rise in the price of crude, the U.S. supply levels are also playing a key role behind the scenes [for more crude oil news and analysis subscribe to our free newsletter].

Crude Oil on the Rise

The most obvious reason for crude making such a sharp jump–more than 6.5% in just a week–has been the riots in Egypt. Civil unrest has struck the nation and many fear what would happen should riots spread into the Middle East. As the days go on, the conflict only seems to get worse, as the Egyptian military saw its threatening ultimatum to President Mohamed Morsy come and go, only to have the military then take over the state TV.

American Oil RefineryThough Egypt itself is not among the top producers in the world, it still accounts for a fair amount of oil, and its neighbors account for even more. If protests and riots spread to other nations, the supply of crude could feel a major pinch, especially with the way U.S. supplies are beginning to shape up [see also How Crude Oil Traders Manipulate The Market].

In the past few weeks, the U.S. has watched oil supplies come under pressure as strong output continues. British Petroleum (BP) just recently announced that its Whiting refinery is back online and operational after undergoing a five-year restoration process, which will draw even further on supplies. Last week’s EIA crude oil inventories figures showed a 10.3 million barrel drop in supplies when analysts had only expected that figure to fall by three million barrels.

Where Crude Goes From Here

While prices are enjoying a temporary spike, they will most likely cool off as soon as the conflict in Egypt does the same. As far as the supply issue is concerned, there are two ways that scenario can break down. The U.S. is rapidly increasing its presence in the oil space and has been the beneficiary of some hefty finds over the past few years, giving it the capacity to increase supply [see also USA Oil Reserves: The World’s Largest?].

At the same time, this surplus of oil may lead producers to begin exporting more oil, further dwindling domestic supplies, which would keep WTI prices higher. Pay close attention to the troubles overseas as well as the trends in the ever-shifting oil space in the U.S. to make sure you stay one step ahead of the curve for this fossil fuel.

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Disclosure: Long BP.

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3 Responses to “Crude Oil Hovers at 12-Month High”

  1. Clark Mandrell says:

    You state here that oil has finally broken thru the triple digit price level. You must not be an American, rather a loyal American? Or you don’t care about you follow citizens. The price or rather the high price of oil is what hurts the poorest of us the most. So rooting for prices to go higher means you are willing to you have the poor and the seniors choose between gas and food, or gas and medicine. I really dislike it when people root for things that hurt all of us, and the poorest of us the most. One of things that says your a Christian or not? But most of us know that the price of oil is controlled by the trades in the oil pit. Obama won’t do anything about it, the FDA takes pay offs to change regulations to favor big business. Such as HFC is now called simply, “sugar”, someone at the FDA lined their pockets with $$ for that change to happen. So your rooting for oil to go up is normal I suppose in this upside down world we call the USA. Should you think of yourselves as a Christian, just means your lying, sin is sin.

    • Sean says:

      This site is geared towards traders. We don’t care if oil goes up or down…we will make money either way. I actually hope oil goes back to $80/barrel. This way, I can make money, and everyone will pay less for gas. :)

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