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Oil Price Gains On Strong OPEC Supply Reduction Pact

05 February, 2018, 05:24 | Author: Samuel Sharp
  • Oil Price Gains On Strong OPEC Supply Reduction Pact

This has had the side-effect of boosting Iraqi compliance with the OPEC deal. So expect the U.S.to remain a very big thorn in the sides of Saudi Arabia and Russian Federation for quite some time.

Crude's Thursday rebound from Wednesday's mild losses - which fueled experts' contention that a price correction is forthcoming - has been accompanied by a major bank declaring that far from heading for a downswing, oil will soon surpass $80 per barrel in a market that is already balanced. Goldman Sachs said Thursday that the market has likely reached a balance between supply and demand, and forecast Brent crude to trade above 80 dollars a barrel later this year, according to Market Watch.

USA gasoline inventories dropped by 1.98 million barrels, according to the data, helping ease concern over lackluster demand.

Trump's Environmental Protection Agency (EPA), Interior Department and other agencies have aggressively worked to roll back or change Obama-era rules, in the name of increasing use and production of domestic energy. Morgan Stanley recently said Brent will reach United States dollars 75 a barrel this year, while JPMorgan said it could rise to near USD 78 as oil markets tighten more rapidly than expected.

The investment bank revised up its forecast for demand growth in 2018 and forecast that oil prices could rise to $82.50/b by mid-year. Total volume traded was about 40 percent above the 100-day average.

In other words, we have no oil glut! Non-tight oil production has been mostly constant over the previous decade.

Kuwait Finance House aims to be "a key partner" with national oil companies to fund projects in the next five years, CEO Mazin Al Nahedh told CNBC Arabia earlier this week. It is just good old fashion supply and demand.

Back in 2008 when prices almost touched $150 a barrel, analysts Arjun Murti, Kevin Koh and Michele della Vigna predicted crude prices could surge as high as $200 a barrel if a major disruption were to affect supply.

Oil prices were mixed Friday morning, as the market weighed rising USA crude output against more bullish factors such as increased compliance with OPEC-led production curbs. Goldman predicts that prices for the global benchmark Brent crude, now trading at about $70 a barrel, will increase to $82.50 in six months.

US production in November was 10.038 million barrels a day, just less than the record of 10.044 million barrels per day in November 1970. The country exported nearly 3.5 million bpd from the south, the outlet for most of its crude, in a slight decline from December's record high.

Two changes drove the resurgence of the USA benchmark.

American production isn't only expanding in onshore shale.



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