Brent crude price passes US$70/barrel mark

Crude Oil Prices to Remain Bid as Overbought Conditions Persist

Crude Oil Prices to Remain Bid as Overbought Conditions Persist

Brent crude continued to hover near $70 per barrel on Wednesday with prices up 15 percent since early December, but some cautioned the oil market could be overheating.

Oil prices rose on Monday, poised to make above $70 on a slight decline in the number of USA rigs drilling for new production and sustained OPEC output cuts.

The futures on United States light crude oil with delivery in February rose by 0.73% to 63.42 Dollars per barrel, while the Brent variety increased by 0.41% to 69.10 USD per barrel.

The price for Brent crude oil is up almost 2 percent since the first trading day of 2018 and showing few signs of slowing.

In trading on 12 January Brent fell to US$69 per barrel after briefly exceeding the US$70 mark the day before.

OPEC, supported by Russian Federation and other non-members, began to reduce output a year ago to remove an oil glut built up in the previous two years. American inventories fell by 4.95 million barrels last week, the eighth consecutive drop, while stockpiles at Cushing, Oklahoma, the delivery point for West Texas Intermediate, extended a decline below the five-year average.

He added that the Saudis' fiscal shape is also vastly improved, "largely because of oil prices".

The rise in oil prices means further accretion to the Excess Crude Account, into which the country saves the difference between the market price of oil and the budget benchmark to provide a cushion when oil prices fall or extra cash is needed for spending on infrastructure.

Giovanni Staunovo, a commodity analyst for UBS, told UPI there were a variety of factors apart from Trump's decision that were pulling oil prices into negative territory. U.S. production also fell by 290,000 barrels per day to 9.5 million. Despite a 30 percent increase in domestic natural gas production since 2008, Girard says Carbon dioxide emissions in the US are near 25-year lows, and key air pollutants have declined 73 percent since 1970. The president must regularly weigh sanctions and not extending them would've pulled the estimated 1 million barrels of Iranian oil flowing in the global market. 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.

The expectation has been that U.S. producers would fill the void - encouraged by the price boost - providing some balance to the market.

Oil bulls, however, "might have taken heart" because the EIA "does not foresee an increase in global stocks assuming some kind of OPEC discipline", according to Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd.

"EIA estimates it costs roughly $0.50/Bbl more to transport WTI from the Asia than it costs to ship Brent from the North Sea to Asia", EIA/STEO reported.

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