Friday, 20 April, 2018

Crude oil settles above $60 for first time since June 2015

Crude oil settles above $60 for first time since June 2015 Crude oil settles above $60 for first time since June 2015
Scott Davis | 30 December, 2017, 03:44

By comparison, production is now only higher in Russian Federation and Saudi Arabia.

Prices have rallied almost 50% since mid-year on strong demand and compliance with OPEC production limits, a trend Andrew Lipow of Lipow Oil Associates thinks will continue into next year; he expects US crude prices to rise to ~$63/bbl by year-end 2018, while Brent remains near $67 as USA oil exports rise to record levels. Oil topped natural gas as the biggest source of electricity in New England on Thursday morning, after temperatures plunged well below freezing. US production is fast approaching the all-time record of 10.04 million barrels a day, set in late 1970, according to EIA figures. The EIA anticipates that USA output will average 10 million barrels a day next year - besting the record of 9.6 million barrels a day set in 1970. US production is fast approaching the all-time record of 10.04 million barrels a day, set in late 1970, according to EIA figures. The rig count, now at 747, stayed relatively stable during the last quarter, even as oil strengthened.

Diesel futures closed at the highest level in more than two years on Friday, up 1.1% at $2.0755 a gallon.

In November, the Organization of the Petroleum Exporting Countries, along with a group of other major producers outside the cartel including Russian Federation, agreed to extend a deal to cap production through 2018.

Oil markets have tightened after a year of production cuts led by Middle East-dominated Organisation of the Petroleum Exporting Countries (OPEC) and Russian Federation. This pattern, known as backwardation, hadn't been seen so consistently since 2014.

Close												An oil pump is seen operating in the Permian Basin near Midland in the U.S. state of Texas
Close An oil pump is seen operating in the Permian Basin near Midland in the U.S. state of Texas

WTI for February delivery settled at $60.42 a barrel, up 58 cents, on the New York Mercantile Exchange. Volume remains well-below average. Front-month prices are about 12 percent higher this year, after rising 45 percent - the most since 2009 - in 2016. The price of the Brent oil rose by 0.71% to 66.63 Dollars per barrel. The benchmark for more than half the world's oil has gained 17 percent this year, after climbing 52 percent in 2016.

WTI traded at an average price of about $52 this year. A survey by the Wall Street Journal showed expectations for a decline of 3.7 million barrels for the week.

US crude futures dropped 14 cents to $59.50 as of 11:22 a.m. EST (1622 GMT), while Brent futures were off by 13 cents to $66.31 a barrel.

"We see USA supply continuing to grow next year but are less concerned about a sudden supply glut re-emerging as rising D&C (drilling and completion) costs will likely slow production growth", said Ashley Petersen of Stratas Advisors. "June will be a real turning point because that's when we'll hear about unwinding the deal, and if Opec doesn't handle it delicately, then there will be concern that the market will be flooded with oil again".

"If there is a bearish wildcard out there, that's it", O'Grady said in a phone interview.




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