Reported by Retuers, oil prices edged higher on Jan.9, with the U.S. crude touching its highest since December 2014, supported by OPEC-led production cuts and expectations that the U.S. crude inventories have dropped for an eighth week in a row.
OPEC and allies including Russia, will keep supply constraints in 2018 to reduce the plunge in oil prices in their inventory.
The price of WTI crude has risen by 2 percent, reaching its highest level since December 2014 at $63.24 per barrel. Brent crude has risen by 1.5 percent. It’s also the highest price since May 2015.This is undoubtedly the strongest closing price since December 2014. The American Petroleum Institute said the U.S. crude oil inventories fell by 11.2 million barrels in the week to January 5.
“This is a little more confirmation of what speculators have been looking for and after tomorrow’s (U.S. government inventory) report, we’ll see if they look to do some profit-taking.” said Rob Haworth, senior investment strategist at the U.S. Bank Wealth Management.
It’s not hard to see that the Organization of the Petroleum Exporting Countries is cutting output even beyond the level they promised. Such restrictions are reducing global oil inventories, the United States which is the largest and most transparent oil market in the world seems to be the most obvious.
“We expect oil demand growth to outpace non-OPEC supply growth in both 2018 and 2019,” Standard Chartered analysts said in a note.
Many producers, still suffering the plunge in prices in 2014 are enjoying the increase of price, although they fear it could spur supply to competitors. Iran said that OPEC members are not keen on raising oil prices.
Meanwhile, rising prices are expected to boost the U.S. production in 2018. Energy Information Administration said the U.S. oil production is expected to exceed 10 million barrels next month, it will be an all-time record.
Some analysts have said that an increase in shale oil production in the United States may prevent OPEC and Russia from maintaining their supply control agreement by the end of this year because of fears of losing market share. But for now, the bullish trend has not changed as prices are still above key support.
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