Oil Prices Rise To $80pb 4yr High After OPEC Rebuffs Trump

26 September, 2018, 14:49 | Author: Teresa Adams
  • Crude prices are spiking

The speculation has kept global crude prices high.

Iran told OPEC its production had been steady in August at 3.8 million bpd.

Brent crude may spike to above that level in the fourth quarter as the market doesn't have enough excess capacity to replace Iranian barrels, Mercuria co-founder Daniel Jaeggi said.

The lack of OPEC's immediate action could mean higher prices.

Total primary energy demand is expected to increase by 91 million barrels oil equivalent per day (mboe/d) and reach 364,7 mboe/d in 2040, according to OPEC's World Oil Outlook for 2018.

While Tropical Depression Kirk bears watching, system between Bermuda, Bahamas could develop
This system could get a boost by Monday as the strong upper- level winds that are now keeping it at bay are expected to diminish. Some strengthening is expected in coming days, but forecasters say Kirk is likely to begin weakening later in the week.

While much will hinge on the volume of disruption and the period over which the loss would be sustained, Mr Staunovo also cited the decline in spare capacity to "lows not seen since 2008" as well as curtailment of U.S. output due to pipeline constraints as other factors behind the oil rally.

Oil prices hit a four-year high of $81.48 a barrel on Tuesday after Saudi Arabia and Russian Federation appeared to reject calls from the U.S. to increase production amid looming sanctions against Iranian oil.

One is Venezuela, which has been faced with a sharp fall in production amid a deepening economic crisis and the threat of USA sanctions. The WSJ Dollar Index-which measures the US currency against a basket of 16 others-was last down 0.1%, having slipped 0.3% over the past five trading sessions. Saudi Arabia, Russia and the United Arab Emirates insisted they had the spare capacity to satisfy the market's needs, but wouldn't tap it preemptively.

Saudi Energy Minister Khalid Al-Falih said "whatever takes place between now and the end of the year in terms of supply changes will be addressed". "The reason Saudi Arabia didn't increase more is because all of our customers are receiving all of the barrels they want".

Most of the potential supply shortfall has already been priced into the contract, Again Capital's Kilduff said.

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Europe, which has attempted to salvage the 2015 deal following the US pull-out, pleaded with America to bring about waivers to exempt certain industries, such as finance and energy. -China trade war and supply, especially from the USA, was seen sufficient in the next 12 months, said Janet Kong, BP Plc's head of trading in Asia.

Hedge funds hold almost 16 bullish long positions in Brent for every bearish short one, up from a ratio of 6:1 at the end of May, and far ahead of the ratio of 9:1 in WTI.

Mohammad Barkindo, OPEC secretary general, said in Madrid on Tuesday OPEC and its partners should cooperate to ensure they do not "fall from one crisis to another".

“Demand for OPEC crude. only reaches current levels again in the late 2020s, when USA tight oil peaks. Still, a trade standoff between the USA and China could put global economic growth and energy demand at risk in the longer term, with BP Plc warning that the risk hasn't been priced into crude yet.

The group broadly agrees that oil prices above $80 a barrel could hurt demand by impairing growth.

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