Moody's raises medium-term price band forecast for crude oil

Pic Reuters

Pic Reuters

Output has been helped by the 25% rise in oil prices over the past year, along with improvements in efficiency and technology.

"The risk is now much higher that President Trump will not waive the sanctions when it is time to do so in May, thus derailing the deal", said Bjarne Schieldrop, chief commodities analyst at SEB AB. A broader market slump initially drove prices lower, while surging American production and increasing inventories remain a challenge.

The Organization of the Petroleum Exporting Countries also said oil inventories across the most industrialized countries rose in January for the first time in eight months, a sign the impact of its output cuts may be waning.

Production rose as well, with USA output hitting 10.38 million barrels a day, a new weekly record; all-time daily output measured on a monthly basis broke a 47-year record in November. Total volume traded was about 11% below the 100-day average.

Brent crude LCOc1 was last up 27 cents at $64.92 a barrel, off an earlier low of $64.43, while U.S. West Texas Intermediate (WTI) futures CLc1 were up 31 cents at $61.02 a barrel.

Despite these various factors helping to boost commodity prices, Moody's believes prices will remain range-bound, and possibly volatile, amid increases in U.S. shale production; reduced, but still significant, global supplies; and potential noncompliance with agreed production cuts - especially if growth in demand is more tepid.

U.S. crude stocks rose by 5 million barrels, the biggest jump since late January, the U.S. Energy Information Administration (EIA) said. That compares with a 2.5-million-barrel gain forecast by analysts in a Bloomberg survey. The American Petroleum Institute on Tuesday ( reported a rise of almost 1.2 million barrels, according to sources.

Iraq is talking with the Kurds and Turkey about restarting crude shipments from fields in the Kirkuk area of northern Iraq, Oil Minister Jabbar al-Luaibi told reporters in Basra.

A multitude of factors were weighing on oil prices, but one factor stands out among the rest, and that's the steadfast climb of United States crude oil production, which for the week ending March 2 increased again, coming in at 10.369 million bpd-close to the 10.7 million bpd figure that the EIA suspects we will see in 2018.

Looking at crude oil prices today, both WTI and Brent are now trading sideways.

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