For this week, what’s threating the oil price were from the Saudi’s comments and poor outlook for the freeze meeting 17th this month. On the contrary, first time of a decreased both oil inventory and output in US combined with a strong support from Yellen’s speech on US economy just helped the oil price lift. This morning, longs beat the shorts and oil went up more than 6% which is one of the biggest movement in this year.
Light, sweet crude for May delivery recently gained $2.31, or 6.2%, to $39.57 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained $2.09, or 5.3%, to $31.52 a barrel on ICE Futures Europe. In a speech late Thursday, U.S. Federal Reserve Chairwoman Janet Yellen sought to dispel worries the U.S., the world’s biggest oil consumer, is heading back toward recession.
Oil traders have spent months with an eye on Federal Reserve policy, the global economy and the dollar. Several times in the past year a rallying dollar and weakening emerging markets have led to big falls in oil, and an end to those roadblocks could help smooth the path for oil to rebound.
The coming meeting between major oil producing countries later this month “remains a strong market maker,” said Michael Poulsen, oil analyst at Global Risk Management. At the meeting, planned for April 17 in Doha, Qatar, the Organization of the Petroleum Exporting Countries and other exporters are set to discuss a production freeze to salvage prices.
A proposed production freezing deal provided some temporary relief in the past two months but investors are still on edge over worries an agreement might not be reached.
Iran has refused to curtail production and vowed to keep pumping until production is on par with the levels seen before sanctions. Saudi Arabia, one of the original initiators of the pact, has signaled it would back out of the plan unless Iran is on board.
Even though the oversupply of oil is going to be in the long term. The recent oil market fluctuates based on the emotion of the market and it’s more like the prospect of this commodity will dominate the trend of oil changes.