In spite of a stockpile storing hub for crude futures pared gains in U.S., the worries about supply outages in Nigeria and Venezuela and the positive attitude Goldman Sachs, the long-time bear, has on this market, Oil prices hit six-month highs today - $49.05 per barrel.
Such phenomenon can be better understood taking into account the impact of demands and supplies of oil.
On the one hand, the demand for oil is very strong, showing no sign to cease, and is believed to go up this summer.
"Gasoline demand that has already been strong this year will undoubtedly see a huge seasonal increase," Will Speer, GasBuddy senior petroleum analyst, states, "This paired with crude prices that continue to show signs of strength are going to keep further pressure on gas prices this summer." The seasonal increase he mentioned is the so-called "driving season" when prices traditionally have spiked and stayed high until reaching a plateau roughly around July 4th.
On the other hand, the supply of oil is under negative impact for a variety of reasons worldwide.
News of interruptions in crude supplies from Nigeria due to militia attacks, from Libya because of a civil war and from Canadian tar sands operations because of wildfires, fed fears that the global oil glut of recent years was suddenly ending.
According to industry officials and security experts, Nigeria's oil output has fallen to its lowest in decades after several acts of sabotage.
On top of that, word that Libya was resuming crude shipments from the port of Hariga after an agreement reached at talks in Vienna between rival oil officials also limited the market's advance. Exports from the port have been blocked since early this month.
Furthermore, U.S. officials warned they were increasingly concerned by the possibility of an economic and political meltdown in Venezuela amid low oil prices, where crude production has also been falling due to power shortages.
"The market likely shifted into deficit in May ... driven by both sustained strong demand as well as sharply declining production," the investment bank said.