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Oil Prices Rise to Three-Year High

Oil Prices Rise to Three-Year High

As predicted, Tuesday's market showing of Brent rising above $68 per barrel is reportedly causing both jubilation as well as fear within circles of the Organization of the Petroleum Exporting Countries (OPEC): on one hand, the price is proof that the cartel's persistent production cutbacks are having a positive effect on tightening the market, but on the other the gains will likely spur even more USA production.

OPEC is monitoring unrest in Iran as well as Venezuela's economic crisis, but the group will only boost output if there are significant and sustained production disruptions from those countries, a senior OPEC source from a major Middle Eastern oil producer said.

Williams added: "Looking at the global oil picture it seems as if the glut of oil stocks is disappearing due to the production cuts imposed by OPEC along with non-member Russian Federation as the United States' crude oil inventories have fallen for eight weeks in a row".

U.S. West Texas Intermediate crude (WTI) gained 36 cents to $62.09 and reached its highest since May 2015 as well at $62.56.

Last November, OPEC together with Russian Federation and other countries extended the deal to reduce oil production, expecting the agreement to cover the entire 2018. USA production fell 290,000 barrels per day to 9.5 million bpd, the EIA said. Iran's oil minister said this week that OPEC is not interested in an oil price above US$60.

The price of crude oil has risen from $68 to $70 per barrel in the global market as a result of rising demand, thus raising hope for the implementation of the nation's N8.6 trillion 2018 budget.

Dakar Rally, Stage 4: ABV Grabs Stage Win
Competitors were challenged by the tricky canyons in the first 40 km of the stage made only tougher by the dunes that followed. Santosh chose to play it safe and steady as the rally neared the halfway mark to finish the stage at 52nd position.

An RAC spokesman said: "If oil stays at this level, pump price hikes will be nearly inevitable.With households across the country still feeling the cost of Christmas this is not the start to 2018 anyone would have wanted. When these factors disappear, oil will go down to the bottom of the corridor to $65-70 per barrel", the expert expects, adding that the general trend will hold prices in this corridor for the next two months, after which we can expect fluctuations in the range of $70-75 per barrel. In both 2018 and 2019, EIA expects total global crude oil production to be slightly greater than global consumption, with USA crude oil production increasing more than any other country.

EIA estimates without pipeline constraints, moving crude oil from Cushing to the U.S. Gulf Coast typically costs roughly $3.50/Bbl.

If achieved, it would break previous records as higher petroleum prices trigger a drilling revival in shale fields, the Energy Information Administration's first short-term forecast for 2019 reveals. The global benchmark crude traded at a premium of $6.19 to March WTI.

Fatih Birol, head of the Paris-based International Energy Agency, said oil prices at $65 to $70 risked encouraging more oversupply from US shale drillers.

Net U.S. crude imports USOICI=ECI rose last week by 152,000 bpd.

As Asian demand for crude oil and petroleum products increase, supply considerations to transport crude oil to Asia are increasingly part of the price formation for global crude oil benchmarks.


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