Oil trades at near three year high

Oil is trading at close to its highest level in three years pushing above $70 a barrel with signs that OPEC and Russia are tightening supplies. 

International benchmark Brent crude futures traded at $70.16 while US West Texas Intermediate (WTI) crude futures gained 51 cents at $64.81 a barrel. 

Both benchmarks are at their highest level since December 2014.

The production cuts by OPEC and Russia are giving the market confidence.

“OPEC and non-OPEC producers remain committed to production cuts at the same time world oil demand continues to increase,” Andrew Lipow, president of Lipow Oil Associates in Houston told Reuters.

“As we go through 2018, the market is also going to continue to look at geopolitical supply disruptions that could occur in Libya, Nigeria and Venezuela.”

The supply market is expected to come into balance after the glut.

“In the next 12 months, we see more or less a balanced market,” Fatih Birol, executive director of the IEA, said in a television interview. “Global oil demand will increase. But a lot of new oil production is coming.”

The warning signs however are continuing North American oil production with US energy companies adding 10 oil rigs in the week to January 12, taking the number to 752, the biggest increase since June 2017, and Canadian energy firms almost doubling the number of rigs drilling for oil last week to 185, the highest level in 10 months.

“From a fundamental perspective, the surge in U.S. managed money raises a clear red flag for us,” Phil Flynn, an analyst at Price Futures Group told Reuters. “We see the US complex as decidedly bearish over the next tw

Business First is a peer-to-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.

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