Crude Oil Approaching 7-Month High

19 October, 2017, 00:45 | Author: Regina Lloyd
  • 2016Organization of Petroleum Exporting Countries President Qatar's Minister of Energy Mohammed bin Saleh al Sada speaks with Secretary General of OPEC Mohammed Sanusi Barkindo, during a news conference after an informal meeting between

Bank of America-Merrill Lynch said last week the spread, or difference, between WTI and Brent, the global benchmark, is what made USA crude oil competitive.

The U.S. bank said that its “revised global oil supply and demand forecasts point to a sizeable deficit in 2017 of 230 thousand bpd”.

After months of range-bound trading during which Opec-led supply cuts supported crude values but rising U.S. output capped markets, prices have moved up significantly this month.

Jeff Brown, president of consultancy Facts Global Energy (FGE), said at the Reuters Global Commodities Summit last week that one potential upside for oil prices would be the USA imposing fresh sanctions on Iran. Its quota under the deal is 3.797m barrels a day, but during the third quarter, it has pumped an average of 3.828m b/d.

U.S. West Texas Intermediate (WTI) crude futures were trading at $51.76 per barrel, down slightly from their last settlement, but still some 2 percent higher than last Friday, and nearly a quarter above mid-June levels.

On the other hand, Iraqi Oil Minister Jabar al-Luaibi announced plans to construct a new refinery in the oil-producing region of Kirkuk, which has become the scene of open conflict between Baghdad and the Kurdistan Regional Government. There were also reports that Kurds had shut down some 350,000 barrels per day (bpd) of production from major fields Bai Hassan and Avana due to security concerns.




Oil prices firmed on October 17, building on gains made as fighting between Iraqi and Kurdish forces threatened supplies from northern Iraq while tension rose between the US and Iran.

OPEC producers have struggled to maintain caps on their output quotas, and Iran has said it supports an extension of the current production cut deal to the end of next year.

Brent oil prices retreated from three-week highs on Wednesday, after a surprising drop in US refining rates and an unexpected gasoline and diesel stock build signaled lower demand in the world's top oil consumer.

USA inventories fell by 7.13 MMbbl last week, the American Petroleum Institute was said to report.

The euro traded at $1.1782, slightly down from the previous day. "These issues remind us oil and geopolitics are very much interlinked and it will remain so".

"Market participants will closely watch the rising oil-production profile in the United States and persistently high exports from the country - factors that will continue to limit gains in oil prices", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

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