Published: Sat, August 04, 2018
Finance | By Marshall Campbell

Analysts See WTI Oil Price Averaging $67 This Year

Analysts See WTI Oil Price Averaging $67 This Year

Brent crude oil spot prices averaged $74 per barrel (b) in June, a decrease of nearly $3/b from the May average.

A "witches' brew" of factors supposedly pointing towards a tightening crude market - despite massive output in July from the Organization of the Petroleum Exporting Countries (OPEC) - was responsible for us crude rising 2.1 percent on Monday after four straight weeks of losses for the benchmark.

Iran said on Tuesday U.S. President Donald Trump was mistaken to expect Saudi Arabia and other oil producers to compensate for supply losses caused by U.S. sanctions on Iran, after OPEC production rose only modestly in July.

West Texas Intermediate shot up $1.44 to $70.13 per barrel, while Brent climbed 83 cents to $75.12 per barrel.

The initial deal, under which OPEC and non-OPEC producers are cutting supply by about 1.8 million barrels per day, had expired in March 2018.

Brent and US crude both logged their biggest daily drop for the month on July 11, after Libya resolved a major disruption to its crude exports and Saudi Arabia reported a almost 500,000 bpd jump in its oil output. This will also mean higher prices.

World oil prices decline on August 1, investors negatively apprehended data from the American Petroleum Institute (API) about the unexpected increase in oil reserves in the US over the past week.

A Reuters survey showed that OPEC has increased production in July by 70,000 barrels per day to reach 32.64 million barrels per day; the highest level so far this year.

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"Oil prices, which were on the rise on concerns of tightening supply, and growing desperation that the loss of Iranian oil supplies would not be easily replaced, may have found a ray of hope", he said in a daily emailed market report.

The Organization of the Petroleum Exporting Countries, plus Russian Federation and other allies, decided in June to ease supply cuts that had been in place since 2017 after a glut was cleared.

Saudi Arabia last week said it was suspending oil shipments through the Red Sea's Bab al-Mandeb strait, one of the world's most important sea routes for crude oil, after Yemen's Iran-aligned Houthis attacked two ships in the waterway.

Kuwait confirmed on Wednesday it had also increased production in July.

"The disruption to Iranian barrels will weigh on oil markets in the second half of 2018 and H1 2019 as there are few spare barrels in the market that can offset a big disruption to Iranian supplies", Emirates NBD commodities analyst Edward Bell told Reuters.

At the same time, representatives of U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are having private conversations as they look for ways to re-engage in negotiations in a bid to avert a full-fledged trade war, two people familiar with the effort said.

Concern over slowing economic growth because of a trade dispute between the U.S. and China are also putting downward pressure on the market.

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