Monday, 22 January, 2018

Oil Price Retreats From $70 Level After Hitting A Three-Year High

Oil Prices Rise After API Reports Staggering Crude Oil Draw Crude Oil Rallies After API Shocker
Nellie Chapman | 13 January, 2018, 08:40

Analysts say that USA shale has been the largest single factor affecting the global energy business in the past decade and the shale boom played a major part in a historic price collapse in 2014.

In the U.S., WTI crude climbed to $63.80/bbl after trading as high as $64.77, as domestic stockpiles posted their eighth straight week of declines, the longest stretch during winter in a decade.

Fuel price hedging company Global Risk Management said in its 2018 outlook that "the likelihood of elevated oil prices this year seems imminent", largely due to the ongoing supply cuts led by OPEC and Russian Federation as well as political risk especially in Iran, Venezuela and Libya.

Prices for Brent crude oil futures, the global benchmark for oil prices, have risen by more than 50 per cent since mid-2017 and hit $70 per barrel this week for the first since December 2014.

"Oil prices have been undeniably bullish this week despite the lingering concerns over the current bull rally running out of steam", said Lukman Otunuga, research analyst at FXTM.

A rally that began in June accelerated in December, with prices rising about 15 percent over roughly the last month. These days, the worldwide expert community is divided over the future of the global oil market.

With the cold front lifting this week, the focus will quickly shift back to whether USA production can head even higher - as many forecasters expect - particularly given this recent boost in oil prices.

Currie also told Bloomberg television that the "new oil order" consisting of the US shale revolution "is still very much underway, putting downward pressure on long term oil prices".

Expectations of another drain on US crude oil inventories supported a soft increase in oil prices early Tuesday, though a reversal may be overdue.

World oil prices rise on Wednesday morning after the publication of the data of the American Petroleum Institute (API) on the reserves of "black gold" in the US, gaining a foothold on the record levels achieved the day before.

According to AAA, the current average US price for a gallon of regular gasoline is almost $2.51, up more than two cents since Wednesday and almost three cents higher in the past month.

Brent for March settlement advanced to $69.90 a barrel on the London-based ICE Futures Europe exchange at 11:28 Eastern time.

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.

The OPEC doesn't seem to be interested in oil prices above $60/b. On November 31, 2016, the oil cartel Opec and non-Opec countries committed to cut down supplies by 1.8 million barrels a day till the end of 2018.

Reports that China customs data showed a sharp fall in December crude oil imports from November prompted the market to edge lower, having breached $70 a barrel on Thursday.

Import and Export Prices for December will be issued at 8.30 am ET.

For more information on crude oil, visit the S&P Global Platts website.