Oil Rises to New Three-Year Highs

Angelo Anderson
May 16, 2018

Crude demand is now expected to increase by 1.4 million barrels per day, down from the previous prognosis of 1.5 million bpd, as a price rise of around 75% since last June to the current level of about $77 per barrel for Brent crude is expected to impact consumption.

US light crude was 26 cents lower at $70.69 a barrel, also not far off its highest since November 2014. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5% at $71.33 a barrel. It had settled at $71.36 on Thursday, its highest since November 26, 2014.

Brent crude futures were last down 47 cents at $77.96 a barrel by 0937 GMT, while US crude futures were down 27 cents at $71.04 a barrel, leaving the spread between the two just shy of a 2015 high of $7 a barrel.

"European and Asian buyers of Brent are pricing in the risks and realities of the fallout from sanctions on Iran to increased tensions in the Gaza strip, as well as the inability of traditional Brent oil producers to fill that void", said Phil Flynn, senior market analyst at Price Futures Group.

West Texas Intermediate, the US marker, is $3.21 a barrel below Middle East benchmark Dubai. An exected drawdown is U.S. stockpiles could see WTI break higher once more.

Source U.S. Energy Information Administration Short Term Energy Outlook May 2018
Source U.S. Energy Information Administration Short Term Energy Outlook May 2018

The Secretary-General, Organisation of the Petroleum Exporting Countries (OPEC), Mohammed Barkindo, attributed the rising oil prices to efforts by OPEC and non-OPEC countries to rebalance the market through production freeze.

"The commitment of Saudi Arabia and the rest of OPEC to the production cuts is a major factor in supporting the price at the moment as well as the possibility of reduced exports from Iran due to sanctions", said William O'Loughlin, investment analyst at Rivkin Securities.

Crude sticking to highs as USA withdrawal from Iran program continues to boost prices.

US shale oil production, meanwhile, is forecast to continue its climb.

In China, the world's biggest oil importer, refinery runs rose almost 12 percent in April compared with the same month a year ago, to around 12.06 million barrels per day (bpd), marking the second-highest level on record on a daily basis, data showed on Tuesday. The U.S. crude contract fell as much as 0.6 percent to $70.95 a barrel on Wednesday.

Other reports by Iphone Fresh

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