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US Crude Oil Price Outlook Bullish After Break Above Resistance

22 March, 2018, 02:16 | Author: Shawna Walton
  • US oil output expected to overtake Russia's

Although Venezuela has been on the analytical community's warning radar for several years now, the more immediate impact on crude seems to be from the Middle East, due to the Saudis on Monday calling the 2015 nuclear deal between Iran and world powers a "flawed agreement" in advance of a meeting between Mohammed bin Salman, crown prince of Saudi Arabia, and the similarly-minded USA president Donald Trump.

After the decline in inventories, crude prices extended their daily gains.

Oil prices rose on Wednesday, supported by tensions in the Middle East and healthy global demand, although rising United States output from the United States continued to weigh on markets.

The specter of conflict involving giant producers is jolting prices, which have traded in a $4-range since mid-February.

International Brent Crude traded as high as $69.86 around 1540 EST (1940 GMT), while American benchmark West Texas Intermediate climbed as much as $65.69 a barrel around 1800 EST (2200 GMT).

Economic stability in the OPEC and non-OPEC member countries is intrinsically tied to high oil prices and a balanced market with demand chasing supply, not the other way around.

Appetite for US crude is adding to the headache facing OPEC.

"Geopolitical risks and uncertainties are rising in the market as the USA and Saudi Arabia share the same interest, which is isolating Iran", Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone in Seoul. The April contract expired Tuesday after adding 2.2 percent to $63.40, the highest close for front-month futures since February 26.

Brent for May settlement gained 21c to $66.26 on the London-based ICE Futures Europe exchange, after slipping 0.2% on Monday.

Refinery crude runs rose 410,000 bpd and refinery utilization rates jumped 1.7 percentage points to 91.7 percent of total capacity, EIA data showed.

Looking at United States crude oil stocks, the most recent EIA figures (March 4) showed rising crude oil stocks and falling gasoline inventories.

OPEC's deal has helped boost oil prices, which topped $71 a barrel this year for the first time since 2014 and were above $68 on Wednesday, supported by a surprise decline in USA inventories. Concerns that Trump could pull out of the Iran nuclear deal also had a positive effect on prices.

The U.S.' increasing arms sales to Saudi Arabia also raises concerns that tensions between the Kingdom and Iran could threaten the security of oil supplies from the region. The resumption of sanctions could drag down oil exports from the Persian Gulf state by 250,000 to 500,000 barrels a day by the end of this year, industry consultant FGE said last week.

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