Crude Oil Prices Increased in 2017, and Brent-WTI Spread Widened

Russia May Exit OPEC Production Agreement

But other analysts are highlighting the increasing levels of U.S. oil production as a potential barrier to prices maintaining high levels this year.

Brent crude oil futures briefly broke back above $70 per barrel while West Texas Intermediate was trading around $64 per barrel.

The and allies including Russian Federation are keeping supply limits in place in 2018, a second year of restraint, to reduce a price-denting glut of oil held in inventories.

The price of crude oil has risen from $68 to $70 per barrel in the global market as a result of rising demand, thus raising hope for the implementation of the nation's N8.6 trillion 2018 budget. At least this is what the Iranian Minister of Oil said the other day. Economists had expected prices to rise by 0.2 percent.

Data from the U.S. Commodity Futures Trading Commission shows the size of the short position for swap dealers has climbed into record territory, an indication of increased producer hedging.

USA crude oil production is forecast to average 10.3 million b/d in 2018, marking the highest annual average production in US history, surpassing the previous record of 9.6 million b/d set in 1970.

WTI is still in the February contract, while Brent moved into March.

Craig at Platts, meanwhile, said gasoline demand could inch lower and it may be a matter of time before oil prices reverse course.


The price rise was in part due to exceptionally large draw of 11.19 million barrels of US crude oil inventories reported by the American Petroleum Institute (API) for the week ending January 5.

Worldwide crude demand is 96 million barrels a day and the country imports around 4.2 million barrels daily or 1,568 million barrels per annum, making it the third-largest consumer globally.

As a result, Asian refiners processed an unprecedented 23 million barrels per day (bpd) of crude oil in late 2017.

Brent crude futures traded 15c lower at $69.11 a barrel at 10.11am GMT.

Mr. Trump faced a series of deadlines waivers this week, and the prospect of renewed sanctions that could crimp Iran's crude exports contributed to higher prices in recent days. Average output next year is forecast to reach 10.85 million barrels per day putting it on par with Saudi Arabia and Russian Federation.

The strength of the oil market would have caught many analysts by surprise as the consensus forecast for oil is probably somewhere in the US$50s per barrel for 2018.

"But if short-term influencers like the Iranian protests and Venezuela production issues were to be sorted out, a sharp price reversal could very well be in the cards".

Such an outcome will provide a huge upswing in valuation (and share prices) of the likes of Woodside Petroleum Limited (ASX: WPL), Oil Search Limited (ASX: OSH), Santos Ltd (ASX: STO) and Origin Energy Ltd (ASX: ORG).

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