Oil prices maintains steady highs, race to $80

Oil prices maintains steady highs, race to $80

Also supportive to prices was the possibility of hard USA sanctions against Iran's oil industry.

US light crude was 15 cents lower at $70.81 a barrel, also not far off its highest since November 2014. "Plus we see a high likelihood of OPEC working with Russian Federation in 2019 to set a floor on oil prices".

Since the accord was reached at the end of 2016, oil prices have climbed to their highest in almost four years to exceed $77 a barrel, up from $30 in early 2016.

Organization of the Petroleum Exporting Countries (OPEC), a 14-member oil producer group, raised its forecast for global oil demand in 2018 slightly, expecting the world to consume 98.85 million barrels a day, 1.65 million barrels a day higher than a year ago. Investors are watching whether OPEC and its allies such as Russian Federation intend to end output cuts and increase production if renewed American measures restrict the Persian Gulf state's exports.

More news: School budget, board vote takes place Tuesday

The White House has said it will impose sanctions on companies that continue to purchase Iranian oil but allow them six months to wind down those contracts.

Michael Wittner, an analyst at Societe Generale, forecasts US sanctions will remove 400,000-500,000 BPD of Iranian crude from the global oil market, Reuters reported. Those partners now include Russian Federation, one of several non-OPEC members that along with OPEC forged the so-called "Vienna Agreement" to monitor production in order to maintain balance between supply and demand.

It is unclear how United States sanctions will affect Iranian oil. Iraq's compliance was at 63%, and it was the only member not to have curbed production as agreed under a deal that took effect January 1, 2017 and is scheduled to run through the end of 2018.

The tightening market has just about solved the global supply overhang that has weighed down oil prices between 2014 and 2017. On the supply side are expectations that as prices continue to rise so will production, including US oil and shale production.

More news: Novartis CEO on Michael Cohen deal

The cartel also said its output rose slightly last month, mainly via Saudi Arabia, but raised its demand forecast for next year by 25,000 barrels per day to average 98.85 million barrels per day.

Additionally, the market retreated as the U.S. Dollar strengthened against other currencies to the highest since December.

The prospect of a drawdown in crude stocks should be supportive for prices along with the tight global supply situation.

More news: Albert Pujols singles to right field to join MLB's 3000-hit club

Related Articles