Oil was the star commodity over 2017-18, and now, despite the move by OPEC to ease its production cap (with Russia and other producers), some analysts are wondering when $US100 a barrel will be regained for the first time since 2014.
Since OPEC’s decision on June 22 and 23 to ease the 1.8 million barrels a day cap (by around a million barrels shares mostly by Saudi Arabia and Russia), prices have jumped more than 10% to Friday’s close of $US74.15 for US West Texas Intermediate crude.
The price of Brent, the global benchmark hit $US79.23 on Friday at the close, up more than 2% on the day. It is up around 5% since June 22.
Helping driving prices higher is President Trump and his administration who has been warning countries no to go on using crude from Iran (China will ignore than). That’s highly ironic because Trump had been whingeing about higher oil prices and urging higher production.
US crude prices for the front-month contract jumped by just over 8% for the week, almost 11% for June and rose over 14% for the second quarter. Year to date, it was up by almost 23% and is up by around 60% for the financial year.
Brent crude prices rose of almost 5.2% last week, 2.4% in June, around 13% for the quarter and 18.8% for the year to date in 2018. Brent rose by around 555 in 2017-18.
Crude oil’s gains have been buoyed by a dispute in Libya over oil-marketing rights that is restricting the country’s export capacity. In Libya, the supply of up to 780,000 barrels of crude a day is at risk, according to analysts. venezuela’s sliding output is also helping boost prices as the US sanctions that country.
Trump’s warning last week about buying oil from Iran threw doubt and confusion into the energy market. The Trump administration indicated that the White House would look to sanction countries that don’t reduce their imports of Iranian crude to “zero” by November. 4. Iran currently exports around 2.4 million barrels a day of crude of which a million barrels or so could be at risk.
However the US State Department then tried clarified those comments after prices jumped, with an official saying that the Trump administration is “willing to work with countries that are reducing their imports on a case-by-case basis”- suggesting that imports of Iranian oil may not reach zero.
US oil prices have been boosted by falling domestic stocks – the US Energy Information Administration on Wednesday revealed that crude supplies dropped by 9.9 million barrels for the week ended June 22—the largest weekly drop so far this year.
Interestingly the EIA production data has shown no increase for US crude output for three weeks now at 10.9 million barrels a day. That’s up around 17% from a year earlier (or 16.8% on a four week average basis).
Active oil rig use is easing – down for a second week last week to 858, a fall of 4.
The number of active oil rigs is up 13.5%, or 102 from a year ago. The number of gas rigs fell by 1 to 187 and is just three higher than at this time in 2017.
