Oil trades near strongest levels since 2015 | Daily News

Oil trades near strongest levels since 2015

Oil prices posted their strongest opening to a year since 2014 on Tuesday, with crude rising to mid-2015 highs amid large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russia.

U.S. West Texas Intermediate crude futures traded flat at about $60.40 by 1200 GMT after hitting $60.74 earlier in the day, their highest since June 2015. Brent crude futures, the international benchmark, were also flat at around $66.80 after hitting a May 2015 high of $67.29 a barrel earlier in the day.

It was the first time since January 2014 that the two crude oil benchmarks opened the year above $60 per barrel. “Growing unrest in Iran set the table for a bullish start to 2018,” the U.S.-based Schork Report said in a note to clients on Tuesday.

“Geopolitical risks are clearly back on the crude oil agenda after having been absent almost entirely since the oil market ran into a surplus in the second half of 2014,” Bjarne Schieldrop, chief commodities analyst at SEB, said, also citing Kurdistan and Libya. Even without the unrest in Iran, which is a major oil exporter, market sentiment was bullish.

“Falling inventories globally and strong economic growth offset the restart of the Forties pipeline and the resumption of production following a pipeline outage in Libya,” said Jeffrey Halley, senior market analyst at futures brokerage Oanda in Singapore.

Oil markets have been supported by a year of production cuts led by the Organization of the Petroleum Exporting Countries and Russia.

U.S. production impact

U.S. commercial crude oil inventories have fallen by almost 20% from historic highs last March, to 431.9 million barrels. However, rising U.S. production is somewhat hampering the outlook into 2018.

“U.S. tight oil production growth warrants close monitoring as it could spoil OPEC’s market-balancing efforts, pushing the market into surplus in 2018,” Barclays bank said. U.S. oil production has risen by almost 16% since mid-2016, to 9.75 million bpd at the end of last year. The Hindu News


 

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