Crude oil prices peaked again raising doubts about overheating of the market

Lloyd Doyle
January 13, 2018

Whether that happens depends on how quickly USA oil exploration and production companies can ramp up more drilling. At the same time, global experts now seem to be overwhelmed by mixed feeling about that.

Brent crude futures were at $69.15 a barrel, 33 cents, or 0.5 per cent, above their last close. WTIfuturescost $63,5/baftergaining 0,8% onthatday.

Brent crude futures, used in the pricing of more than half the world's oil, rose as much as 1.2 per cent to the highest since December 4, 2014.

Crude oil prices continued to soar Wednesday, as industry data showed another surprisingly large drawdown in USA oil inventories.

U.S. drilling has continued to slow down, with explorers trimming the number of rigs targeting crude last week by the most since November.

Nogami: OPEC, led by Saudi Arabia, and non-OPEC oil-producers such as Russian Federation have agreed to extend the current cut in oil output for nine months. Our listed energy stocks are also on a tear as the overnight surge in the crude price to a three-year high is prompting some to ask if oil is heading towards US$100 a barrel.

Oil prices shoot up in just 3 months.


While prices fell, the reaction was somewhat muted, which analysts said is a sign that oil's rally isn't yet over.

As shale oil development trends are rather uncertain, it is possible that the upward trend in crude oil prices will continue.

"If, however, the US's fracking production increases substantially there is a hope that the price of oil may fall back and settle at the mid-$60 a barrel mark". Bloomberg tried to compile those prediction into a single article. The US is now producing far more from fracking but this isn't filling the gap from the OPEC cuts. The summit ended with extending the OPEC+ deal until the end of 2018. While the oil market is balancing, there is still some room for improvement, United Arab Emirates Energy Minister Suhail Al Mazrouei, also OPEC president for 2018, said at a conference in Abu Dhabi.

Olivier Jakob, managing director of PetroMatrix, noted, "We're still drawing USA stocks and that continues to support a very positive sentiment", and he added that physical Brent above $70 per barrel will surely trigger discussion among Organization of the Petroleum Exporting Countries (OPEC) members about the need to continue their crude output cutbacks.

In a 10 January report the bank said "Oil prices are become increasingly detached from the fundamental data and risk overshooting".

From the middle of 2014 motorists in the United Kingdom began to benefit from falling pump prices, culminating in December 2015 when a few low-priced retailers sold both petrol and diesel for under £1 a litre. Since mid-July, Saudi, the largest producer pledged to lower crude oil exports.

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. West Texas Intermediate, the USA benchmark, was up 0.66 percent to $62.14 per barrel. Crude oil seems to have stop saving the day for the Russian economy and national currency.

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