Oil prices rose more than 3% this morning, pushing Brent crude to a 2015 high above $63 per barrel on increasing evidence that U.S. production is peaking, moving to balance a market that has been in heavy oversupply for more than a year.
As Reuters reports, oil prices collapsed in the six months to January, pushing Brent down more than 60% to almost $45 a barrel. But the market has gradually recovered this year as much lower prices have discouraged oil exploration and production, especially in the United States.
“People are realizing that the U.S. production juggernaut is slowing, at least for now,” says Virendra Chauhan, oil analyst at London-based consultancy Energy Aspects.
Brent crude futures for June delivery hit $63.29 a barrel this morning—the highest since December—after the previous much weaker front-month futures contract, for May, expired on Wednesday.
But by 9 a.m., June Brent was back down to $62.52 a barrel, down 80 cents from the previous close for June, but up sharply from Wednesday’s close for May at $60.32. U.S. crude, meanwhile, was at $55.79, down 60 cents, after hitting a 2015 high of $56.69 on Wednesday.
Reuters technical analyst Wang Tao predicts Brent could rise toward $70 a barrel in the near term, but that a sharp downturn could happen after that. U.S. oil prices jumped on Wednesday after U.S. inventories built up more slowly than expected, although still to a new record. Despite the oil price rally, the market remains oversupplied, analysts say.
