The Black Gold continues to climber higher as Crude Oil Prices gained 0.17% to trade at $101.40 and stayed well above $101 mark on Thursday. Whereas, the front-month WTI contract gained by 1.65% to reach a high of $102.18 and the Brent Crude gained by 1.69% to trade at $105.45 a barrel.

The Crude prices had started rising a few days due to supply threats caused by unrest in Egypt and indications of a decline in US Oil inventories. This continued rise in Crude oil prices suggest that Black gold is on track for one of its highest weekly gains in a month. This is further supported by expectations of good US jobs data indicating at a recovery in the World’s largest Oil consumer.

Considering the reasons underpinning the Crude oil’s rising trend, Egypt turmoil figures as one of the biggest factors. In Egypt, the people had led week-long protests demanding the ouster of the incumbent President Mursi. Responding to the rising public tensions the army had issued a 48-hour ultimatum to the President Mursi’s Government to resolve this issue.

Later, after the expiry of the ultimatum, the army toppled the democratic government and removed Mursi from power. This had raised panic about the possible disruptions to the biggest oil supplying routes of the Suez Canal and the Suez-Mediterranean Pipeline. This concern over crude oil supply disruption stoked the crude prices to climb higher for the past few days.

Moreover, the US oil reports had indicated at a decline in the crude oil inventories for last month. The recent U.S EIA (Energy Information Administration)Reports confirmed these speculations as it revealed that the US crude oil inventories had indeed dropped by 10.3 million barrels for the last week. This is the biggest drop for this year and is also three times more than the seasonal expected drop.

Additionally, the US gasoline inventories too fell by a huge margin of 1.7 million barrels. This is because the refineries ramping up their production, by increasing their operating capacity to 92.2%, to meet the rising fuel demand of the summer driving season in US. In line with this trend the distillates stockpiles, which includes the heating oil and diesel, too declined by 2.4 million barrels.

These facts suggest that there is a possible rise in demand for crude oil in US, the world’s biggest oil consumer. This obviously had a positive effect on the prices of Crude oil that continued to rise higher on demand expectations and supply concerns.

However, the supply concerns in the MENA region of Egypt, is bound to ease off as the Military has smoothly take over the government and announced immediate elections. Reports suggest that till now the operation in the Egypt’s Suez Canal, the most important sea-route for oil shipments has not been affected.

Furthermore, analysts estimate that the OPEC’s oil exports will rise by 540,000 barrels per day (bpd) in the coming weeks of July. These factors are bound to steady the price rise in crude oil in the coming days.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.