Oil Breaks Above $60 on Increasing Demand

30 December, 2017, 03:47 | Author: Natasha Holloway
  • Oil Breaks Above $60 on Increasing Demand

USA crude oil exports reached 1.1 million b/d in February 2017, the highest monthly level on record.

Meanwhile, global economic growth has pushed expectations for oil demand higher.

Brent for March settlement rose 71 cents to close at $66.87 a barrel on the London-based ICE Futures Europe exchange. The futures on United States light crude oil with delivery in February reported an increase of 0.69% to 60.25 USD per barrel. EIA forecasts total US crude oil production will average 9.2 million barrels a day for all of 2017 and 10 million barrels a day in 2018, which would mark the highest annual average production, surpassing the previous record of 9.6 million barrels a day set in 1970. Brent has risen around 38 percent since its low in 2017 reached in June.

On the economic front, the number of rigs operating in US oil fields remained unchanged at 747 rigs this week, while gas rigs are down 2 rigs at 182, according to oilfield service firm Baker Hughes' weekly report released Friday.

Now, Kloza sees further downside for the commodity that's already tumbled almost 8 percent this year as US production keeps climbing.

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

West Texas Intermediate, the USA benchmark, is now trading at the highest level since mid-2015, pushed above $60 a barrel by a severe cold snap in the northeastern US that spiked demand for heating fuel. Analysts expect production to top 10 million bpd in the next few weeks and to keep growing, limiting efforts by other producers to cap global supplies.

According to the EIA, U.S. crude stocks fell last week as refineries hiked output, while gasoline and distillate inventories rose.

"The tug-of-war between OPEC and the USA will continue to pressure oil from trading above $60 a barrel in 2018", said Kim Kwangrae, a Seoul-based commodities analyst at Samsung Futures Inc. Inventories are down by nearly 20 percent from historic highs last March, and well below this time a year ago or in 2015.

X China issued import quotas for 2018 that traders believe could result in record-high purchases, according a Reuters. The problems around the North Sea and Libya pipelines also put pressure on the prices, but both are expected to run at full speed in early January.

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