The oil price is taking a breather today after racking up seven consecutive days of gains and some believe the rally is poised to continue as we enter the 2nd half of the year.
The first half of the year is a time that bullish oil traders would like to forget with the price putting in its worst fist six month start in nearly 20 years as the US ramped up production and countries such as Libya and Nigeria greatly increased output.
But now, with Opec and Non Opec members extending their oil cuts until March next year, the stage may be set for something big,
"The energy sector has been down but it is not out, the fundamentals are set up for a second-half comeback." noted Rob Thummel, managing director for Tortoise Capital Advisors,
"You are going to see crude oil inventories globally and domestically begin to decline month after month. That will support crude oil prices, boosting the entire sector," he added.
Oil may also receive a boost after news released showed a decline in U.S. drilling activity for the 2nd time this year which has raised speculation that an oil price around $45 is not profitable enough for more oil rigs to come on board in the US.
“The decline signals that U.S. oil supply struggles to remain profitable between $40 and $45 a barrel,” said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.