Oil prices stay high

01 January, 2018, 03:51 | Author: Manuel Hopkins
  • WTI Crude Oil

Oil's trading at the highest level since mid-2015 after WTI breached above $60 a barrel for the first time in more than two years.

But while 2018 is shaping up to be a tumultuous year for crude, it could be that the US plays a lesser role in creating chaos than some think: the Federal Reserve Bank of Dallas this week noted in its latest survey of 134 energy firms based in Texas, New Mexico, and Louisiana that prices above $60 per barrel are needed to see a significant uptick in activity.

The rise saw WTI hitting its highest level since June 2015 on the final trading day of 2017.Brent crude futures - the global benchmark for oil prices - were also up, rising 33 cents or 0.5 percent to $66.49 a barrel.

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. Since the start of the year, Brent and WTI have risen by 17 and 12%, respectively, although the price rises from mid-2017 are much stronger, at almost 50%.

Besides the weekly drawdown, the EIA also said that US oil production dipped to 9.754 million barrels per day, down from 9.789 million bpd the previous week. Inventories declined 1% week-over-week and 54.2 MMbbls or 11.15% year-over-year.

USA output is still up by nearly 16% since mid-2016, but most analysts had expected production to break through 10 million bpd by the end of this year-a level only surpassed by top exporter Saudi Arabia and top producer Russian Federation.

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Refiners have profited in recent months as the spread widened between United States crude and Brent futures prices.

USA output has surged overall this year, hitting a 46-year high in October when producers pumped 9.6 million barrels a day, according to federal data.

Strong OPEC compliance with the supply pact should lend support to prices, analysts said.

OPEC cuts kicked off last January and are scheduled to continue throughout 2018.

Consultancy JBC Energy said Libyan pipeline outages had "no major impact on exports".

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