nsucurrent.com February 22, 2018

Crude oil prices rally to highest levels this year

27 September 2017, 12:34 | Ruby West

Crude oil prices rally to highest levels this year

Crude oil futures up on positive Asian cues

At 2:29pm BST, the Brent front month futures contract was down 1.34% or 79 cents to $58.23 per barrel, having spiked by 4% to within touching distance of $60 intraday - it's highest level since July 2015 - before retreating during afternoon European trading.

Opec and non-Opec producers meeting in Vienna last week said the market was well on its way towards rebalancing.

The U.S. government reported that crude production rose to 9.51 million bpd last week, resuming output close to levels before Hurricane Harvey hit the Gulf Coast in late August.

Turkish President Tayyip Erdogan warned to stop supplies from the pipeline that delivers oil from northern Iraq to support the independence referendum of the Kurdish autonomous region.

Nine months of output cuts by the group and its friends have certainly contributed to the higher prices.

The meeting participants expressed satisfaction with the level of implementation of the oil cut deal, while further oil cuts were among the topics of the talks.

U.S. West Texas Intermediate and internationally-favored Brent crude oil surged on Monday with Brent hitting a new 2017 high.

Furthermore, oil prices have gained over 30% since June as global inventories have tightened following expanding demand from industrialised countries as well as emerging markets for the first time in almost a decade. And the global demand picture looks promising: the International Energy Agency sees it growing by 1.6 million barrels a day in 2017, up from a June forecast for growth of less than 1.3 million barrels a day.

A threat to Iraqi Kurdistan's crude exports has helped to support prices that have risen on strong oil demand, while OPEC cutbacks have pared bloated inventories, according to the FT.

In May, OPEC and non-OPEC members agreed to extend production cuts of 1.8m barrels per day for a period of nine months until March 2018 but rising production from the U.S., Nigeria and Libya has undermined the oil cartel's efforts to curb excess supply.

Mr Hamm, chief executive of Continental Resources, the biggest leaseholder and producer in the Bakken oil basin, said he didn't believe that now was the right time to start hedging next year's production.

The company launched the LOOP Sour price quote in March this year to mark prices for medium-sour grades of crude produced offshore in the United States and imports for the USA gulf coast. The oil group's cuts are doing the job intended, shale isn't responding, and Opec and friends may finally be reaping the rewards from nine months of impressive compliance with the output deal they agreed on late a year ago.

However, analysts are skeptical about further price gains due to higher oil output from the United States.

One of the top agenda items at the meeting held on September 22 was to monitor compliance, and OPEC officials were clearly much happier than they were a few months ago.

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