July 27 (UPI) — Renewed optimism about the rebalancing of the crude oil market brought concerns about excitability and dragged the price for oil lower early Thursday.
A decision from Saudi Arabia this week to cut its output further, signs of strong demand growth in the United States, the world’s leading economy, and security concerns in OPEC-member Nigeria helped push the price for Brent crude oil back above $50 per barrel, after lingering in the mid-$40 range for much of the second quarter.
An emailed research report from Goldman Sachs said declining levels of crude oil and gasoline in the United States, a downturn in exploration activity and strong demand suggested the pace of rebalancing was picking up.
“We remain, however, cautiously optimistic on prices from the current level with the recent improvements in fundamentals needing to be sustained for oil prices to rally meaningfully further,” the report read.
That backs analyst sentiments that $55 per barrel, rather than $50 per barrel, may be indicative of a full market shift.
The price for Brent crude oil was down 0.27 percent at 9:10 EDT to $50.83 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.35 percent to $48.58 per barrel.
The Organization of Petroleum Exporting Countries aims to correct a lopsided market with managed production declines.
This week’s rally above the $50 mark came as several energy companies reported earnings for the second quarter. Most of the major players reported gains for the quarter, but also reservations about the rest of the year.
Royal Dutch Shell reported exponential growth for the second quarter, after turning in financial reports last year that were the worst in about a decade. Net profit for the second quarter was $3.6 billion, up from the $1 billion reported for the second quarter 2016. CEO Ben van Beurden said, however, the company would remain “very disciplined” and was focused on surviving with oil in the $40 range.
Higher crude oil prices would in theory bring in capital to exploration and production, which shows up in weekly rig count figures. U.S. energy company Anadarko Petroleum, however, said the operating environment was still riskyand, as a result, the investment level would move lower by $300 million for the year.
