Oil Prices Jumped to the New High Since 2014

20 April, 2018, 01:37 | Author: Salvatore Jensen
  • Oil Prices Jumped to the New High Since 2014

The rise in price, which has spurred a sharp rally in energy shares, follows 16 months of supply cuts by Opec and Russian Federation that have removed at least 1.8 million barrels a day from the market.

"If oil prices were to move toward $80 a barrel and euro weakened a bit, there could be some inflation pressure", said Rabobank's head of macro strategy Elwin de Groot.

NEW YORK, April 19 (Reuters) - Oil prices hit highs not seen since 2014, with us crude edging closer to $70 a barrel, after OPEC producers told Reuters the inventory overhang has largely disappeared and as top exporter Saudi Arabia aims to push prices even higher.

"The fact that the gasoline inventory reduction was more pronounced than anticipated was due to record-high gasoline demand, which is extremely unusual outside the summer driving season", said Commerzbank analysts in a note. "The market will remain supported for the next couple of days with the meeting in Jeddah". A committee that monitors adherence to the cuts meets in Saudi Arabia on Friday, and the wider group will gather in June to determine whether the agreement should be adjusted.

A global oil glut has been virtually eliminated, according to a joint OPEC and non-OPEC technical panel, two sources familiar with the matter said, thanks in part to an OPEC-led supply cut deal in place since January 2017.

While U.S. oil companies' first-quarter results, which will be released in the coming weeks, will provide the latest evidence on how the sector is performing with much higher oil prices, the fourth quarter of 2017 augured the current turnaround. "If the idea is to get a ton of money in the door now, then they're probably doing the right thing", Stuart said.




The decline in both crude and gasoline stocks was above market expectations and pushed crude oil prices higher, analysts said.

"Would they declare victory now and stop?" In the end, it's about revenues. "They need higher prices".

OPEC's Secretariat in Vienna will be tasked to prepare a study with different scenarios on inventories, market fundamentals and the risks which might impact market stability such as possible US sanctions on Iran, one of the source said.

According to the International Energy Agency (IEA), the USA will overtake Russian Federation to become the world's largest oil producer by 2023.

It looks like OPEC and Russian Federation are deliberately overtightening the oil market and won't call the end of the cuts yet, aiming at higher oil prices and shrugging off (at least in the short term) the potential threats to the oil market balance-a shale surge and possible slower demand growth.

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