Oil Price Increases Above $68 Per Barrel, Its Highest
Since May 2015
Oil prices edged higher on Tuesday, touching its highest since May 2015, supported by OPEC-led production cuts and expectations that U.S. crude inventories have dropped for an eighth week, reports REAUTERS.
The Organization of the Petroleum Exporting Countries and allies including Russia are keeping supply limits in place in 2018, a second year of restraint, to reduce a price-denting glut of oil held in inventories.
Brent crude was up 18 cents at $67.96 per barrel by 11:08 a.m. EST (1608 GMT) and earlier touched $68.29, its highest since May 2015. U.S. West Texas Intermediate crude (WTI) rose 36 cents to $62.09 and also reached its highest since May 2015 at $62.56.
“We expect oil demand growth to outpace non-OPEC supply growth in both 2018 and 2019,” Standard Chartered analysts said in a note.
“In our view, the back of the Brent and WTI curves are both still underpriced. We do not think that prices below $65 per barrel are sustainable into the medium term.”
OPEC is cutting output by even more than it promised [OPEC/O] and the restraint is reducing oil stocks globally, a trend most visible in the United States, the world’s largest and most transparent oil market.
Supply reports this week from industry group the American Petroleum Institute and the U.S. government’s Energy Information Administration are expected to show U.S. crude stocks fell by 4.1 million barrels, an eighth week of decline. [EIA/S]
The API releases its data at 4:30 p.m. EST (2130 GMT) on Tuesday and the government report is due at 10:30 a.m. on Wednesday.
Many producers, still suffering from a 2014 price collapse, are enjoying the rally, although they are wary it will spur rival supply sources. Iran said on Tuesday that OPEC members were not keen on increased prices.
Unrest in Iran, OPEC’s third-largest producer, has lent support to prices this year although output and exports have not been affected. Economic collapse is leading to involuntary production cuts in Venezuela, another OPEC member.
There is no sign yet that OPEC is prepared to relax its supply restraint.
A senior OPEC source from a major Middle Eastern oil producer said on Monday OPEC would boost output only if there were significant and sustained production disruptions from Iran and Venezuela.
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