Oil prices race to $80 as US drilling rises

Pauline Gross
May 15, 2018

Brent crude was up 20 cents at 77.32 dollars a barrel by 1315 GMT on Monday and United States light crude rose 10 cents to 70.80 dollars.

Industry analysts also said the market situation was further fuelled by the success of the Organisation of Oil Exporting Countries, OPEC and Non-OPEC members to withdraw excess crude from the market.

The Vienna-headquartered organization estimated on Monday that oil demand will increase by around 1.65 million barrels per day to reach 98.84 million bpd of total global oil consumption for 2018, according to its monthly report.

Many analysts predict the impact on Iranian crude supply later this year won't be as strong, some saying Trump could reduce Iran's oil shipments by 300,000 to 500,000 BPD.

"The geopolitical tinderbox around the Middle East seems to be encouraging buyers, while global supply demand fundamental are staying "strong enough" to keep the sellers at bay for now", analysts at TAC Energy said.

OPEC will discuss whether the production caps should be adjusted at a meeting next month.

OPEC has also predicted that U.S. drillers outside its group will pump 59.62 million barrels per day this year, or 1.72 million barrels a day more than last year.

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Otunuga told Arab News that the price of oil has further room to rise this week.

Those data added to a healthy picture of global oil production as producers pounce on higher prices.

According to a Baker Hughes report last Friday, the U.S. oil rig count rose by 10 a year ago.

U.S. West Texas Intermediate (WTI) crude futures were at $70.88 a barrel, down 8 cents, though still not far off their November 2014 high of $71.89 a barrel reached last week.

While the rising production figures are bearish clouds, "we're continuing to see the general momentum being brought forth, which has continued to point higher", said Ton Headrick, an analyst at CHS Hedging. Gasoline futures rose 0.52% to $2.2002 a gallon.

Last week, Trump vowed to quit the landmark 2015 accord and promised to re-impose sanctions on Iran.

Discussing global economic growth, however, OPEC pointed out that "the build-up of potentially disruptive concerns has increased", citing the latest U.S. sanctions on Russian Federation, tariffs on Chinese products in combination with considerable requests by the U.S.in trade negotiations with China, U.S. tariffs on steel and aluminum, prolonged North American Free Trade Agreement (NAFTA) negotiations, and the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) with Iran.

Other reports by GizPress

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