Supply Outlook Ends USOil's Rally Before It Hits Strongest Run in 16-Months
- US Oil prices fell after four consecutive daily gaining sessions
- There have only been three other 4-day rallies going back to April 2015
- Government raises production forecast to average 8.73mb/d from 8.61mb/d
US Oil prices fell for the first time in five trading days after government forecasters raised their outlook for domestic production. That ended its climb before it could tally its first five day advance since April 2015. US-based output is now expected to average 8.73 million barrels per day this year instead of the 8.61 million barrels per day that was previously forecast. A nice oil rally in the spring, after a difficult start to the year, encouraged US oil producers to reactivate their idle rigs. This could potentially have added to the United States raising their domestic production outlook.
With this increase and the oil market remaining oversupplied, traders may be skeptical that the Organization of the Petroleum Exporting Countries (OPEC) would consider capping their production for the upcoming month. While the U.S. has shown a moderately healthy demand for oil, paired with a slowdown in global growth forecasts from the likes of the IMF, it may be difficult to soak up any additional output causing oil prices to extend losses.
With the supply-demand speculation still weighing in, a five-day climb for USOil would prove unobtainable. The last five-day rally was tallied back in April of 2015. There have been three other instances of four-day advances in that time frame with the most recent back on April 29, 2016.
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