Economy

Boston Energy Research: Oil Price Outlook Unchanged

Boston Energy Research: Oil Price Outlook Unchanged”

Crude oil, Nigeria's biggest revenue earner yesterday hit $58 per barrel, the highest price in 2017, surging the country's excess crude earnings by $22.1 million in one day.

First Vice-Rector for International Cooperation and External Communications of Financial University under the Government of the Russian Federation, the founder and CEO of the national energy security Fund of Russia, Konstantin Simonov, also linked the current increase in oil prices with news from the US.

Oil continued with its slow and persistent rally on Friday, with Brent hitting six-month highs of almost $57 a barrel on optimism that OPEC won't flood the market with supplies despite its decision not to immediately extend production cuts through next year.

"The uptrend in oil prices it taking another leg higher after the Opec meeting on Friday reported high compliance with output cuts and implied an extension of the cuts beyond March", said Jasper Lawler, head of research at London Capital Group.

Hedge funds have become strongly bullish on the outlook for all parts of the petroleum complex, amid signs global crude stocks are declining and fuels will be short supply after hurricane-related refinery outages. Crude inventories fell by 1.85 million barrels last week after analysts surveyed by Bloomberg forecast an increase.

On supply, whether the Organization of the Petroleum Exporting Countries (OPEC) and its allies extend their combined 1.8 million bpd output cuts beyond the March 2018 expiry is a key uncertainty.

It settled down 1% on Tuesday, after earlier hitting $59.49, its highest since July 2015 and more than 34% above a 2017 low.

The October West Texas Intermediate which rallied to its highest since April and was up by 3% on Monday to $52.22 per barrel which is a seven-month high.

United States crude inventories were seen rising for a fourth straight week, an extended Reuters poll showed on Tuesday.

While U.S. crude futures have also risen, its discount against Brent is at its widest since August 2015 weighed down by increasing U.S. shale oil production growth.

For much of the year, market participants were skeptical of OPEC's efforts.

Technological improvements and greater efficiency has helped USA shale producers pump out crude oil at lower margins - some say it is now profitable at less than $50 per barrel.

During the height of summer demand, stocks fell by around 2.5 million barrels per month.

At 2:40pm EST, WTI was trading down 0.69% (-$0.36) at $51.86, while Brent crude traded down 0.92% (-$0.54) at $57.89-dollars above last week's levels.

There has been a fair bit of commentary on the demand as well as the supply side supporting the strength in crude oil prices.



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