Once again, oil prices inched higher Wednesday, thanks to an even greater decline in United States storage levels. the U.S. Energy Information reported in their weekly crude oil report on Wednesday that the country’s oil inventories had decreased by 2.67 million barrels, just since May 15. That left 482.2 million barrels in U.S. storage. Previous to the release of this report, investors worried that there may be an oversupply of oil, but that fear drastically diminished with the recent realization of the storage decrease.
The storage decrease is a major factor in rising prices. The price has risen about $1 a gallon per barrel on West Texas Intermediate (WTI) crude oil, raising the price per barrel to $58.98. The increase is even more for Brent oil. That price per gallon has very recently risen 1.2 percent to $65.80 a barrel. The Inquistr reports that as of May 8, the price per barrel was just under $60 per barrel, which is nearly a $6.00 increase in less than two weeks.
During the week of May 3, the United States was producing approximately 9.37 million barrels per day. As of last week, that number was already down to 9.35 million barrels per day. However, that number is significantly higher than last year when the United States was only producing 8.39 million gallons a day.
That is not enough to appease investors, however. The prices of crude oil have been so low that the increased production of the oil doesn’t necessarily yield good results for oil companies. In fact, the number of operational rigs has decreased by 50 percent since last year, which is one of the biggest reasons that prices are beginning to climb.
Another major contributor to the rising prices is economic data from Asia. Japan, which has the third largest economy in the world, has grown by 2.4 percent, just in the first three months of the year. Chinese manufacturing also has a hand in the boost. According to the Wallstreet Journal, the HSBC China Manufacturing Purchasing Managers Index has risen.2 points, from 48.9 in April to 49.1. China is the largest importer of oil in the world, and when their economy fluctuates, it affects oil prices everywhere.
Political tensions in the Middle East have also largely contributed to the growing prices, particularly tensions in Yemen. The United States has kept a very close watch on Yemen recently, and the unrest is not good for oil production. Yemen is not considered a major producer of oil, but it is very close to major shipping routes, and Saudi Arabia, the world’s top oil exporter, is just across the border. Because of unrest so near such a large production of oil, oil prices are continuing to rise.
[Image via BT Magazine]