Bearish threat still prevails despite of the recent surge in oil price

There has been massive chaos in the oil industry as the investors were I doubt regarding the increasing stockpile of the U.S crude inventories. But in the last week, there has been a decent drop in the U.S crude stockpile and this created a strong bullish surge in the price of crude. The price of oil was falling down dramatically in the global market from the very beginning of the last year. Things settled down to a great extent after OPEC put a production cap into major leading oil producing countries. The supply of oil was significantly higher in the global economy compared to the demand and this created the sharp fall in the price of oil. The oil cap production decision by the OPEC was a drastic and fruitful event and the global economy has not seen such strong move from the OPEC leaders since 2008.After the oil cap decision, the price of oil rallied higher in the global economy and most of the professional oil investors made a decent profit in the global market by riding the bullish rally in the market. However, the price of oil started falling in the global market as soon as the oversupply problem increased again in the global economy.

The bearish threat in oil market: The price of oil rallied higher in the global market on the last Friday due to a sudden drop in the U.S stockpiles. Most of the leading oil investors are thinking that this has been caused by the oil cap production of OPEC in the last year. The price of crude went up by 0.49 percent in the global market and traded at $49.08 a barrel. On the other hand, the Brent in the ICE Futures Exchange in London traded at %52.02 a barrel and gained near about 0.56 percent in the global market. According to the U.S Energy Information Administration, there has been a decent drop of 237,000 barrels in the U.S crude oil which is the highest drop since the January 2017.The price of oil rallied much more than expected in the global market as the U.S dollar index fell in the global market despite the rate hike by the FED. Most of the professional oil investors are thinking that the price of oil will rally higher in the upcoming week as the U.S dollar is most likely to remain under bearish pressure. However if the oversupply problem or U.S crude stock rises in the global market then we will see another sharp drop in the price of oil in the online financial market.

Positive gain prior to week closing: The number of active oil rigs in the U.S is now one of the most major concern of the oil investors. For the ninth consecutive weeks the number of oil rigs in the U.S economy is increasing and now it has exceeded 631 in number which was only 12 in the very beginning of the year 2016.Such a dramatic rise in the oil rigs is definitely creating an extreme level of fear into the oil investors as it will create an oversupply problem in the oil industry. However, the U.S government has stated that they are going to adhere to the OPEC rules and will not create oversupply problem in the global economy. But such a large number of the oil rig is burning questions for the professional oil investors about the next movement of the oil price. However in last Thursday Saudi Energy Minister gave some relief to the oil investors as he stated that both OPEC and non-OPEC members will try to limit their current production rate of oil in the global economy to stabilize the energy field. If the OPEC manages to tighten the supply of oil by the month of June this year then we will see a strong bullish rally in the oil price in near future and this might initiate a fresh bullish trend in the oil market.

Concerns of leading oil producers: Most of the leading oil producers in the global economy is adhering to the rules of OPEC to bring stability in the oil price. Countries like Saudi Arabia and Kuwait has already cut their oil production more than they promised. They have also stated that they will limit their current production of oil further more to tighten the current supply of oil in the global market. On the other hand, Iraq is also showing a positive sign to limit their current production oil in the global economy. Some of the leading economists are suggesting that it will hard for Iraq to limit their current production rate of oil since their economy is greatly dependent upon the production of oil. On the other had the dramatic rise in the oil rigs in the U.S economy is also a major concern for most of the oil investors in the global economy since it is imposing the strong bearish threat to oil bulls in the market.

Summary: The price of oil rallied higher in the global market prior to market closing as the U.S crude stockpile went down in the global market. The recent weakness in the U.S dollar in the global economy also helped the oil bulls to drive the price oil higher in the global market. Currently, the price of oil is slightly in bullish mode but investors are in fear since the oversupply problem might again rise in the global economy without any prior notice.

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