Oil Exceeds $70 As Brent Settles

Galtero Lara
Enero 13, 2018

Some analysts, however, warn that markets might be overheating.

How is the November agreement between OPEC and non-OPEC countries including Russian Federation to be interpreted?

At first sight, we could think that those oil nations who signed the oil agreement can now celebrate since at 75 dollars per barrel, for example, Russian Federation and Saudi Arabia could eliminate most or even all of the budget deficit. "OPEC is being exemplary citizens here, keeping supply under wraps".

By 1415 BST, the oil price was still rising.

Analysts at Commerzbank said they didn't expect him to revoke it.

Trading volumes were higher than average, with a flurry of trades at about 10 a.m. EST as prices jumped.

Crude oil prices ended 2017 at $60/barrel (b), the highest end-of-year price since 2013.

As anticipated, the Energy Information Administration confirmed earlier reports that USA crude inventories fell 4.9 million barrels last week - and even though bigger than expected builds in gasoline and fuel stocks offset that drawdown, it was enough to cause West Texas Intermediate on Wednesday to settle up 61 cents to $63.57 per barrel and Brent to climb 34 cents to $69.16 per barrel.

On August 25, 2017, Hurricane Harvey made landfall in the U.S. Gulf Coast, disrupting refinery and port operations and resulting in a steep decrease in refinery operations. Likewise, if tensions between Saudi Arabia and Iran escalate, that may also affect the supply of crude oil.

It said this was likely to have a knock-on effect on the forecourt due the increase causing the wholesale price of fuel to rise. "But there will be a reaction in USA shale, and Opec's strategy will backfire massively". Moving that crude oil from the United States to Asia costs approximately $0.50/b more than to ship Brent from the North Sea to Asia. However, the most wide-ranging systemic risk to commodities this year could be President Trump disturbing the political world order, Bloomberg quoted Citigroup as saying.

The EIA also forecast that total U.S. output would hit 10.04 million barrels per day during the first quarter of this year, a level it was not expected previously to reach until the fourth quarter.

Oil Exceeds $70 As Brent Settles
Oil Exceeds $70 As Brent Settles

This comes as stocks in the region have increased seven of the last eight weeks by almost 5.8 million barrels to 58.21 million barrels. So, even though the prices have been growing so far, this is not victory for the OPEC and Russian Federation.

Traders are watching the surplus on the five-year average in crude oil inventories for signs of balance.

Although output has grown considerably faster than forecasts, there is also the possibility that the oil will be more and more hard to extract in the future.

Crude oil export volumes and the number of destinations for those exports continued to increase. Likewise, there is the possibility of shale oil becoming increasingly hard and costly to extract.

And in addition, oil-burning power plants in New England which rarely get used all year have been running hard, contributing one-third to ISO New England's power generation fuel mix at times.

Q: What will become of global crude oil supply and demand in the mid- to long-term?

EIA forecasts the West Texas Intermediate (WTI) crude oil spot price will average $55/b in 2018 and $57/b in 2019.

Production cuts, led by the Organization of the Petroleum Exporting Countries and Russian Federation, which are set to continue throughout 2018, have underpinned prices.

Uncertainty over whether the crude rally can stick and fears that advances in electric vehicles will undermine longer-term demand for oil still overshadow the sector. That is equivalent to what Saudi Arabia and Russian Federation produces.

Q: How should Japan respond? Brent touched $69.29 in late Tuesday trading, the highest December 2014. In 2016, the average price difference was less than $1/b.

More news: Baylor's Rhule interviewed for Colts job

Otros informes por

Discuta este artículo

SIGUE NUESTRO PERIÓDICO