Following the rise of U.S. local refineries last week, oil prices will recover and touch around the $60 per barrel in the coming weeks.
Last week, crude oil prices hit 3% higher with the West Texas Intermediate trading to as high as $52.22 per barrel or a seven month high while the Brent crude recorded as much as $59 per barrel due to the outlook that oil demand will rise further. The International Brent crude posted a positive third quarter while the U.S. West Texas Intermediate recorded its best rally in the past three months.
Oil prices started mostly negative this week after most crude oil prices traded down by $1 per barrel on Monday. Despite this, oil prices are still on track to touch $60 per barrel. The price of crude oil which have jumped in the past week are still projected to rise due to various factors including the improving political tensions as well as growing demand numbers.
However, analysts have warned the possibility of crude oil prices tumbling back down during the fourth quarter due to reasons such as refineries going on maintenance as well as investors appetite for crude oil going down. Gasoline product demands also go slightly down during the summer until the holidays while diesel and home heating fuel demand is not expected to go up until the second half of the fourth quarter due to the temperature.
Oil stocks are expected to rise and recover this week due to renewed oil demand along with the fact that supplies have not quite risen yet due to the recent hurricanes that hit most refinery locations in the past month. The market is also currently positive that the Organization of Petroleum Exporting Countries might extend their output cuts by another couple of months as they meet in Vienna this coming November. Their current agreement is to cut their production until early next year.
In Asia, oil producers are currently concerned that prices will lead U.S. producers to increase drilling activity which will send oil prices down once again. In the past months, the recovery in oil prices have been offset due to the increased production in the United States that led the markets to question the role of the country in global oil production.