You are here: Home » Reuters » News
Business Standard

Oil markets firm as Brent edges ever closer to $80 per barrel on tight market

Reuters  |  SINGAPORE 

By Gloystein

SINGAPORE (Reuters) - prices firmed on Thursday, with Brent crude creeping ever closer to $80 per barrel, a level it has not seen since November 2014, as supplies tighten while demand remains strong.

Brent crude futures were at $79.36 per barrel at 0451 GMT, up 8 cents from their last close.

U.S. Intermediate (WTI) crude futures were at $71.71 a barrel, up 22 cents, or 0.3 percent, from their last settlement.

said on Thursday that Brent was "now threatening to break through $80 per barrel ... (as) geopolitical risks continue to support prices, (and) an unexpected fall in inventories in the U.S. got investors excited yesterday."

U.S. crude inventories dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels.

ANZ said the falling U.S. inventories were "raising concerns of tight markets heading into the U.S. driving season," during which demand typically rises.

Looking beyond seasonal changes, U.S. said it had raised its Brent price forecast to $90 per barrel by 2020, due to a steady increase in demand.


Not all indicators pointed to a tighter market, however.

"A weakening dollar, strong economic growth and price have all supported a tremendous recovery in demand over the last few years, clearing the oversupply in the market. With the dollar strengthening, and softening economic growth, we see a threat to demand growth from 2019," BMI Research said on Thursday.

The International Energy Agency (IEA) said on Wednesday that it had lowered its global growth forecast for 2018 from 1.5 million barrels per day (bpd) to 1.4 million bpd.

The IEA said global would average 99.2 million bpd in 2018.

And although supplies currently only stand at 98 million bpd due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), the IEA said "strong non-OPEC growth ... will grow by 1.87 million bpd in 2018."

Leading production increases is the United States, where crude output has soared by 27 percent in the last two years, to a record 10.72 million bpd.

That puts the within reach of top Russia, which pumps around 11 million bpd.

As a result of its surging production, U.S. crude is increasingly appearing on global markets.

said that the surge in U.S. supplies was a "strongly price-bearish development."

It said the economic outlook was also "firmly bearish" as "short-term credit conditions have worsened which ... hasn't been priced correctly by the market".

The brokerage also said that U.S. "continues to decrease which is never good for the future consumption of oil".

(Reporting by Gloystein; Editing by and Richard Pullin)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, May 17 2018. 10:36 IST