Oil price climbs to its highest level since 2015

  • Oil rose to its highest level since 2015 on 2 Jan 18, climbing to an intraday high above USD67 a barrel as hedge funds placed a record bet that Brent crude’s near 35% rally over the past six months will continue into the new year, with protests in Iran stoking buying. While Iran’s oilfields have so far been unaffected by the largest protests against the Islamic regime in almost a decade, traders said renewed risks in Opec’s third-biggest producer had added to momentum as prices test new peaks.
  • Brent crude oil, the international benchmark, hit a high of USD67.29 a barrel in early trading on 2 Jan 18, before easing to USD66.50 a barrel. US benchmark West Texas Intermediate reached USD60.74, also the highest in two and a half years.
  • The rally in prices since Jun 17 has come as Opec-led production curbs designed to end a three-year old oil glut have helped tighten the market.
  • The Opec and Russia-led curbs, which they have agreed to extend throughout 2018, have set up a potential showdown with the US shale industry now prices are back above USD60 a barrel.
  • The US Energy Information Administration forecast in Dec 17 that US oil production would rise by 780,000 barrels a day in 2018, a figure that could rise higher if prices remain strong, though question marks about the still relatively nascent industry’s strength remain.
  • While global oil demand is forecast to rise by about 1.4m barrels a day in 2019, growing US shale output combined with new projects in Brazil and Canada are broadly expected to see non-Opec supply rise by a similar amount.
  • The restart of the North Sea Forties Pipeline System, which had cut off about 450,000 barrels a day of supplies in the second half of Dec 17, has not yet added significant pressure to the market.

External Link : https://www.ft.com/content/dbba0720-efc8-11e7-ac08-07c3086a2625