Oil E&P stocks gain as oil prices spurt

Eric Thomas

The senior OPEC source also said the oil market was on its way to being re-balanced, but so far global oil inventories remained above their five-year average and much more time was needed to drain the oil glut.

USA crude futures CLc1 were trading 22 cents to $63.19 a barrel as of 10:49 a.m. EST, while Brent LCOc1 rose 14 cents to $68.95 a barrel.

However, the decline in crude inventories in the United States during the latter half of 2017 have helped oil prices recover and rally further before the year ends trading to as high as $68 per barrel during the first trading session of 2018.

Brent sweet crude futures were at $67.95 a barrel, 33 cents above their last close.

In trading on 12 January Brent fell to US$69 per barrel after briefly exceeding the US$70 mark the day before. On November 31, 2016, the oil cartel Opec and non-Opec countries committed to cut down supplies by 1.8 million barrels a day till the end of 2018.

The bank said the forthcoming IPO of the Saudi Arabian oil company Aramco also argues against any overly hasty u-turn in OPEC production policy. Iran's oil minister said this week that OPEC is not interested in an oil price above US$60.

Oil E&P stocks gain as oil prices spurt

Thursday's rise was also bolstered by a surprise fall in United States oil stockpiles.

Worldwide crude demand is 96 million barrels a day and the country imports around 4.2 million barrels daily or 1,568 million barrels per annum, making it the third-largest consumer globally.

As Asian demand for crude oil and petroleum products increase, supply considerations to transport crude oil to Asia are increasingly part of the price formation for global crude oil benchmarks.

Crude inventories at the key pipeline hub in Cushing, Oklahoma, decreased by 1.5 million barrels in the week that ended on January 5, according to a forecast compiled by Bloomberg.

Only last week the RAC warned that the "good times" of lower fuel prices are likely to be behind us for the time being, noting that at the end of December 2017 a tank of unleaded cost nearly £4 more than it did in July.

The oil market has been buoyant for weeks, with USA crude futures at highs not seen since late 2014, and Brent crude less than $1 per barrel away from a similar milestone. "It's not completely unexpected, given the price momentum". In the United States, crude oil production is expected to break through 10 million barrels per day (bpd) this month, reaching levels only Russian Federation and Saudi Arabia have. A false breakout above an old high is one of my favourite ways in determining trend reversal, so that's something I would be looking for in the case of oil going forward, especially as WTI's weekly and daily Relative Strength Index (RSI) indicators are both at "overbought" levels.

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