July 9 (UPI) -- Crude oil prices moved into positive territory Monday ahead of the start of trading in New York amid growing concerns about a supply-side deficit.
Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter the downturn in the price of crude oil that started in 2015 forced companies to cut back on spending. Three years later, the price of oil is hovering near four-year highs amid growing fears those cutbacks mean there wasn't enough support to keep up with demand.
"Now the global oil market is in a precarious state and now almost everyone is aware of and concerned about the tight market conditions that increase the possibly of supply shock prices as global inventories are not sufficient to alleviate shortages," he said.
Members of the Organization of Petroleum Exporting Countries, along with support from Russia, agreed in late June to ease compliance with a production agreement that cut into the huge glut of oil that pushed the price of oil to historic lows in early 2016. The implied amount of extra production, however, might not be enough to compensate for production woes in Libya, the potential loss of Iranian oil from the market in November and chronic shortages from Venezuela.
The price for Brent crude oil, the global benchmark for the price of oil, was up 0.8 percent as of 9:18 a.m. EDT to $77.73 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.16 percent to $73.92 per barrel.
WTI had been supported since late June when Canadian energy company Suncor said its Syncrude oil sands processing facility was shut down because of power disruptions. The company on Monday said some production would resume by the middle of July and full capacity was expected by September.
Gains in the price of oil followed a strong jobs report from the United States last week. Further indications of the strength of the U.S. economy will emerge Thursday with the release of the Consumer Price Index, which reflects changes in the cost of living. Higher fuel prices have strained consumer pocket books so far this year.
In Europe, projections show a gradual cooling in the regional economy, with annual growth moving from 2.1 percent this year to 1.7 percent by 2020.
"While uncertainties related to global factors, including the threat of increased protectionism, have become more prominent, the risks surrounding the euro area growth outlook remain broadly balanced," European Central Bank President Mario Draghi said in his prepared remarks Monday from Brussels.