Expect crude oil to trade positive: Sushil Finance
- Author: Eleanor Harrison Sep 16, 2017,
Sep 16, 2017, 0:40
The International Energy Agency (IEA) has raised its forecast for world oil demand in 2017 by 100,000 barrels per day in comparison with the August forecast to 97.7 million barrels per day, according to a media report.
Oil prices dipped lower following news of the latest North Korean missile launch, although there was a measured response from currency markets which helped limit the reaction in energy markets.
Iran Heavy, the country's main export grade and one of the 14 crudes of OPEC Reference Basket, traded at $48.70 per barrel last month, an increase of 5.8% from July.
Inventories of USA crude rose by roughly 5.9 million barrels in the week ended September 8, confounding expectations of a rise of about only 3.2 million barrels.
Total OPEC oil production, meanwhile, was down for the first time since March.
Crude oil prices have seen an increase of around six percent in August 2017 on a month-on-month basis due to depleting inventory levels.
Traders also weighed weekly data from the USA government which revealed a smaller-than-expected rise in crude supplies, a hefty drop in gasoline stockpiles and a jump in domestic output as production in the Gulf of Mexico recovered in the wake of disruptions from Hurricane Harvey.
It also stated that global oil glut has started to tighten due to stronger European and United States demand and shrinking of output from the Organization of the Petroleum Exporting Countries (OPEC) member nations. The IEA and OPEC also boosted demand forecasts. On May 25, OPEC and non-OPEC nations agreed to extend the existing level of oil production cut (1.8 mln barrels daily) until April 2018.
West Texas Intermediate, a measure of USA oil prices, hit $50 a barrel for the first time in 5 weeks on Thursday. He also referencing dropping ship reserves and abridged output by OECD economies, where production has fallen to five-year averages.
Although bullish demand outlooks have been driving prices higher, there's a psychological barrier at the US$50 mark, which is "still a selling point for a lot of people", Michael Lynch, president of Strategic Energy & Economic Research Inc in Winchester, Massachusetts, said by telephone.
"We don't expect a spike up in prices nor do we expect a big drop in prices". Talks will be held with other OPEC members about extending the cuts at an October 4 meeting of the Gas Exporting Countries Forum in Moscow.