Oil surges to highest since 2014 as global stocks tighten

Jeannie Matthews
January 13, 2018

Brent also marked a December-2014 high the previous day, at $70.05 a barrel.

In Asia, the world's biggest oil-consuming region, refiners are suffering from high prices and ample fuel supplies.

Federal U.S. estimates show total crude oil production hit 9.78 million barrels per day in the week ending December 15, a record high that Craig said was out of reach because of the recent U.S. cold snap.

Global consumption of petroleum and other liquid fuels grew by 1.4 million b/d in 2017, reaching an average of 98.4 million b/d for the year.

"A healthy (price) correction could be on the cards", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore. Traders said relatively weak China December oil data had weighed on prices.

Crude oil prices dipped into negative territory on Friday on signs Washington would indeed extend waivers that let Iranian oil flow on the global market. USA production fell 2,90,000 barrels per day to 9.5 million bpd, the EIA said, foiling expectations of United States output breaking through 10 million bpd. And their purchases of crude could fall. At the same time, Venezuela's economic and political crisis continued to wreak havoc on its production capacity, with production falling to levels not seen since 2002.

Giovanni Staunovo, a commodity analyst for UBS, told UPI there were a variety of factors apart from Trump's decision that were pulling oil prices into negative territory.

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BMI Research said in a note this week: "In Q1, the balance of risk to Brent (prices) lies to the downside".

The Organization of Petroleum Exporting Countries, with help from big producers like Russian Federation, are working to drain the surplus through managed production cuts, now in their second year. "Supply disruptions and falling USA and global inventories have driven crude oil higher", said Ole Hansen, head of commodity strategy at Saxo Bank in a note.

The market was bolstered modestly by data showing a sharp decline in USA production last week.

Members of the Organization of the Petroleum Exporting Countries fear current price gains could prompt US shale oil companies to flood the market.

The American Petroleum Institute said late on Tuesday that USA crude inventories fell by 11.2 million barrels in the week to January 5, to 416.6 million barrels.

The nation's crude oil stockpiles fell for the eighth consecutive week, sliding by nearly 5 million barrels last week, the Energy Department said Wednesday.

The EIA said it expects the share of U.S. 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.

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