Brent crude price passes US$70/barrel mark

Jeannie Matthews
January 13, 2018

So, the higher oil prices will go, the more shale oil will eventually be shipped to the global market.

Feb. WTI oil gains 23 cents, or 0.4%, to settle at $63.80/bbl, having briefly jumped above $64.

Analysts and traders warned about the risks of a price correction since the start of 2018, but they say overall market conditions remain strong, mainly due to output cuts led by oil cartel Opec and Russian Federation.

The Yomiuri ShimbunTakayuki Nogami, a chief economist of the Japan Oil, Gas and Metals National Corporation, spoke about the current crude oil market with The Yomiuri Shimbun.

It said this was likely to have a knock-on effect on the forecourt due the increase causing the wholesale price of fuel to rise. The reporting season kicks off in earnest on Friday, with results from the big USA banks JPMorgan Chase & Co and Wells Fargo & Co.

Wall Street closed at record highs on Thursday as rising oil prices lifted energy stocks and investors bet on a strong US corporate earnings season. Another variable to watch will be USA crude oil production.

Brent reached $70.05 a barrel, the highest price recorded since oil prices were crashing in December 2014, while US benchmark West Texas Intermediate rose to $64.77 a barrel, supported by a almost 5m barrel drop in US crude stockpiles, according to weekly data from the US Energy Information Administration (EIA) published yesterday.

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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.

MCX Crude oil futures are trading at Rs 4029 per barrel, down 1.73% on the day. However, there were fears that investors would lose confidence in OPEC and prices would plummet if the extension was limited to six months.

And in addition, oil-burning power plants in New England which rarely get used all year have been running hard, contributing one-third to ISO New England's power generation fuel mix at times.

The rise in price is said to constitute a good omen for the nation's 2018 budget which was based on $45 per barrel and 2.3 million daily oil output.

In a 10 January report the bank said "Oil prices are become increasingly detached from the fundamental data and risk overshooting". In December, China's crude imports fell 9% month on month to 33.7-million tonnes, or 7.97-million bpd, customs data showed. His comments boosted prices, which rebounded from earlier decline, though the market has not hit the heights it touched on Thursday, when Brent crude topped $70 a barrel for the first time since December 2014.

Reuters reports that Saudi Arabia doesn't want oil prices to grow too fast.

For more information on crude oil, visit the S&P Global Platts website.

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