Oil Closes Higher On International Energy Report

On Thursday, oil prices closed slightly higher after a very bullish international energy report. Optimism that an On Thursday, oil prices closed slightly higher after a very bullish international energy report. Optimism that an extension to the output cut deal will be put in place also helped keep oil prices higher.output cut deal will be put in place also helped keep oil prices higher.

What may have capped gains would have been the new Baker Hughes report on oil rigs. WTI crude oil closed higher by 0.1% to $53.18 per share, while Brent crude oil closed higher by 0.1% t $55.89.

International Report

Oil prices traded higher after a report from the International Energy Agency, based out of Paris, stated that supply and demand were nearing each other in the global market. What this means is that the demand for oil is closely matched with an equal amount of output.

There was both good news and bad news with respect to the released report. The good news is that oil from industrialized nations fell by 17.6 million barrels in March. The bad news was that inventories still remained at an elevated level of 300 million barrels. That is still above the 5-year average. Still, the fact that supply has been met with a near equal amount of demand bodes well for oil prices.

Possible Deal

The oil market still has a lot of positives going for it. One event that everyone is optimistic about is the upcoming OPEC meeting. The meeting will take place towards the end of May. This is where OPEC and non-OPEC nations will come together to potentially extend the output cut deal.

For the first six months of 2017, OPEC was able to create a deal where nations would agree to cut a certain amount of supplies per day. The final number was to be able to cut at least 1.8 million barrels of oil per day from the global market. The new meeting taking place soon will deal with extending those cuts.

There is no guarantee that the extension of the cuts will be achieved. The problem is that Saudi Arabia and several other countries will not agree to a deal if many others are not on board.Things have been going really well with the pledged nations on cutting output. It is reported that in March the amount of cuts exceeded what the countries pledged they would cut. That is a really good thing because an extension would be a much needed reduction in global oil output.

Oil Rigs

Oil prices posted small gains for the day, but were probably capped due to the reported oil rig data. Baker Hughes released new oil rig data that painted a very bearish tone. It reported that there were a total of 11 rigs added in the week ending April 13. There are two issues with this development.

The first of which is that it is the thirteenth week in a row where oil rigs have been added to the total. The more rigs that pop up, the smaller chance oil prices have to recover. That brings the total amount of rigs in the U.S. to 683. Oil rigs have been increasing ever since oil prices have managed to climb over $50 a barrel.

The problem is that increased supply produced from these new oil rigs could somewhat counter the OPEC cuts. That is why OPEC has even called for the U.S. to join in on efforts to curb production. The problem is that the U.S. has no interest in joining with OPEC to curb its oil production output.

What Binary Options Traders Should Watch For

There are a few things that traders should watch.

The first of which is how the current balance between supply and demand plays out. If supply starts to exceed demand again, then oil prices will trade lower. There is just so much excess inventory that needs to be removed from around the globe.

The second item would be whether or not the extended OPEC deal comes into play. It is still a few weeks out, but optimism could possibly carry the price of oil higher in the meantime. Still, if an extended deal is not achieved that will be bad for oil prices.

The final item that traders should keep an eye on would be the amount of oil rigs being added each week. Next week Baker Hughes will release its new rig count. Another report of additional rigs being added will be highly bearish for oil.