Three reasons oil prices are climbing
Oil prices jumped by over a dollar today, taking the price of the black stuff to its highest level this year, and it also comes on the back of a month rally.
Here's why oil prices are pushing upwards:
1. US crude stocks
Industry group American Petroleum Institution (API) yesterday said US crude oil stocks fell 1.5m barrels while stocks at the key delivery point of Cushing in Oklahoma fell 336,000 barrels.
Some analysts said this showed the oil market was tightening, with supply becoming more constrained, a development which will eventually lead to higher prices.
And investors will be looking to see whether this is confirmed by the US Energy Information Administration's official stockpiles data, due out later today.
2. The conflict in Yemen:
Witness reports that planes from a Saudi Arabia-led coalition struck Yemeni towns overnight, following mortar attacks from Iran-allied Shi'ite Houthi rebels, riled global oil markets.
Yemen is a relatively small nation in the Middle East, which doesn't actually produce that much oil. Nevertheless, its close proximity to a key route for the global shipment of oil called the Bab el-Mandab (in the bottom left hand corner) means developments there can push up oil prices.
(Source: IEA)
3. The US dollar rally
The greenback fell 0.3 per cent against a basket of currencies today and is on course for its fourth straight weekly loss. Oil is priced in US dollars per barrel, so when the greenback depreciates against other currencies, the black stuff effectively becomes cheaper for foreign buyers.
