The share prices of major ASX listed oil groups hit a series of new multi-year highs yesterday as global oil prices surged to their highest since late 2014 and the start of the big slide in prices.
And there are market forecasts for global oil futures to hit $US90 a barrel and perhaps $US100 a barrel in coming months.
The prices of Woodside, Oil Search, Santos, Origin Energy, and BHP all bounced yesterday – some by up to 3% – after OPEC and Russia made it clear they would not accede to Donald Trump’s call for higher production to take the pressure off oil prices in the run-up to the US midterm elections in early November.
Trump has started pressuring OPEC countries to produce more oil ahead of the tightening of sanctions his administration have imposed on Iran.
He and the Republican Party are under growing pressure from supporters as US petrol prices creep towards the $US3 a gallon mark.
The prices of Brent and US West Texas Intermediate – the two key global prices rose on Monday and into Asian and early European trading last night. Brent prices topped the $US80 a barrel mark, US crude breached the $US72 a barrel level.
That saw shares in Woodside Petroleum end the day with a gain of 2.5% to $37.99 and the highest they have been since 2014. Santos shares rose nearly 3% to $7.33 after being up 4% in trading, and the highest since early 2015.
BHP Billiton shares rose 0.8% to $34.10 (a three month high) Origin Energy shares were up 1.6% to $8.15 and the highest they have been since early 2015, while shares in PNG oil and LNG group, Oil Search ended at $8.90, up 1.8% and the highest they have been for well over three and a half years.
Adding to the pressures from the impact of the Iran sanctions from the Trump administration (which have cut Iranian production by at least 300,000 to 500,000 barrels a day) are falling US oil stocks – now at their lowest since early 2015.
And while US oil production is near a record high of 11 million barrels a day (BPD) weakening drilling activity toward a slowdown in output in coming months.US daily production has been stuck around 11 million barrels a day for just on two months now.
Commodity traders Trafigura and Mercuria said Brent could rise to $US90 per barrel by Christmas and pass $100 in early 2019.
The Financial Times reported that Ben Luckock, co-head of oil trading at commodity house Trafigura, told an energy conference in Singapore on Monday that Brent could surpass $US100 a barrel early next year, as oil supplies tighten when US sanctions against Iran are fully implemented.
And analysts at US bank JPMorgan said US sanctions on Iran could lead to a loss of 1.5 million barrels per day, while Mercuria warned that as much as 2 million BPD could be knocked out of the market.
OPEC and non-OPEC producers agreed in June to boost production by 1 million barrels a day in an effort to get output nearer to a previously agreed upon ceiling of 1.8 million barrels a day.
Headed into the Algiers meeting on Sunday, there was speculation that an additional output increase of 500,000 barrels a day would be implemented to address shrinking supplies from Iran. But that didn’t happen and the Saudis and Russians made it clear they saw no need for a change.
