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Talking Points

• US Oil prices have hit six consecutive sessions of gains – the longest series since March 26, 2015

• The rate of change through this six-day period is the strongest since the rally through April 12

• Lifted trade restrictions have increased buyers of US oil

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US Oil prices have now advanced for six consecutive sessions, marking its best run since March 2015. Earlier this month, a 4-day rally ended after government forecasters raised their outlook for domestic production. That increased production forecast seemed to generate skepticism with the market dubious that there will be enough demand to soak up additional output from OPEC and non-OPEC producers, extending losses.

Earlier this year President Barack Obama signed a bill ending 40 years of export limits for crude oil. This lifted ban has increased the amount of countries purchasing US Oil and has allowed existing customers to obtain more.

Recently, weekly EIA inventory data revealed an unexpected drawdown of 2.51 million barrels. This implies that the quantity demanded could be increasing faster than the anticipated increase in production. Excluding the threat of headwinds by Saudi oil production, this supply-demand imbalance may contribute to a continuation for this extraordinary run of advances.

With supply-demand speculation still weighing in, the Baker Hughes U.S. rig count will serve as top scheduled event risk for oil watchers as we head into the end of the trading week. Even though the count has increased for 10 of the past 11 weeks, the number of operating rigs – a measure of US crude supply – is still near it lowest since April 1999.

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