Published: Sat, January 13, 2018
Science | By Hubert Green

Oil Exceeds $70 As Brent Settles

Oil Exceeds $70 As Brent Settles

Oil Prices yesterday showed significant upward gain hitting their highest levels since 2014 as a result of the ongoing production cuts led by the Organisation of Petroleum Exporting Countries, (OPEC), as well as healthy demand.

OPEC and the non-OPEC countries that agreed to crude oil production cuts in 2017 also agreed to continue limiting output through the end of 2018.

Prices for Brent crude oil futures, the worldwide benchmark for oil prices, have risen by more than 50 per cent since mid-2017 and hit $70 per barrel this week for the first since December 2014.

Brent crude oil prices on Friday fell from the high of $70 per barrel reached on Thursday for the first time since December 2014.

Brent for March settlement added 13 cents, or 0.2%, to $67.75 a barrel on the London-based ICE Futures Europe exchange.

OPEC, supported by Russian Federation and other non-members, began to reduce output a year ago to remove an oil glut built up in the previous two years. US production fell 290,000 barrels per day to 9.5 million bpd, the EIA said. The second factor, the current political protests in Iran, has sparked concerns over the future viability of oil production in the OPEC member state.

Oil had its strongest opening week for any year since 2013 last week as USA stockpiles continued to shrink and amid output curbs by the the Organisation of Petroleum Exporting Countries (Opec) and its allies.

Amid the rising price of oil, Citi's latest research on how Wildcard's could affect the markets in 2018, includes details on what could push the price of Brent crude oil up to $80 per barrel. US crude oil production is forecast to average 10.3 million b/d in 2018, marking the highest annual average production in USA history, surpassing the previous record of 9.6 million b/d set in 1970.

U.S. crude oil production is expected to surpass 10 million barrels per day (bpd) next month, en route to an all-time record months ahead of previous forecasts, the U.S. Energy Information Administration said Tuesday.

Most of the production growth, the EIA noted, will be in the Permian Basin.

"If oil stays at this level, pump price hikes will be nearly inevitable".

Oil extended gains above $62 (R766.95) a barrel before USA government data forecast to show crude stockpiles declined for an eighth week and as political tensions kept on simmering in Iran, Opec's third-biggest producer.

Crude oil prices tested the 62-handle but was unable to move higher.

The EIA said it expects the share of USA total utility-scale electricity generation from natural gas to rise from 32% in 2017 to 33% in 2018 and to 34% in 2019, as a result of low natural gas prices.

But some traders are sounding a warning - the world's biggest crude consuming region, Asia, is showing signs of an impending downward correction.

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