How Much Is a Barrel of Oil Today? - June 2015

how much is a barrel of oilHow much is a barrel of oil, 5/6/15: Oil futures maintain their month-long winning streak today amidst geopolitical concerns in Saudi Arabia, Yemen, and Libya.

At 10:05 a.m., WTI oil prices were up 2.68% and trading at $62.01 a barrel. Today marks the first time WTI oil has reached above $62 a barrel since early December.

Brent oil prices moved slightly less. They gained 2.5% to $69.21 a barrel. Prices for the London benchmark have increased 13.1% this year.

The rally to new highs for a barrel of oil's price comes during heightened tensions between Saudi Arabia and neighboring Yemen. Last night, planes from a Saudi-led coalition struck Yemeni towns following mortar attacks from Iran-allied Houthi rebels.

Yemen sits on the Bab el-Mandeb strait. According to the Energy Information Administration (EIA), 3.8 million barrels of oil and "refined petroleum products" pass through the Bab el-Mandeb each day. It's the world's fourth-busiest chokepoint.

Tensions have also been high in Libya. Zueitina - an oil port in the northeastern part of the country - has been shut down by protestors seeking employment at the facility. Zueitina exports up to 70,000 barrels a day.

The third piece of bullish news pushing a barrel of oil's price higher is the EIA's weekly supply report. It stated that crude inventories fell for the first time in more than four months. Supplies fell 3.9 million barrels last week, blindsiding analysts' forecast of a one-million-barrel increase.

According to Money Morning Global Energy Strategist Dr. Kent Moors, this strong rebound in oil prices will continue the rest of the year.

Here's why...

Why the Price of a Barrel of Oil Will Rise in 2015

The reason behind the oil price rebound is simple - oil production will have significantly declined by mid-summer.

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"Probably the most encouraging sign for oil prices is that supply drawdown," said Joseph Tanious, principal and investment strategist at Bessemer Trust, to The Wall Street Journal. "But I'd want to see more confirmation of that - that it's happening in a sustained way - before we call a bottom."

Moors says that's exactly what we're going to get. Unconventional wells only produce for an average of 18 months, which means production will fall back over the next few months.

Reduced drilling and M&A activity will also draw down the glut. All of these forces are combining to fuel demand and outpace supply.

So how high will the price of a barrel of oil be later in 2015?

"I do believe oil prices will climb significantly by late August," Moors noted. "Assuming there are no geopolitical 'wild cards' that cause prices to spike higher, I believe oil will trade in the low $80s range by the end of 2015."

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