Markets

Oil prices hold near 2015 highs, but doubts over rally emerge

Oil prices hold near 2015 highs, but doubts over rally emerge

He added: "Yet even with these factors offering a boost, prices will likely remain range-bound, and possibly volatile, on a combination of increasing U.S. shale production, reduced but still significant global supplies, and potential non-compliance with agreed production cuts - especially if demand growth is more tepid".

"The holiday demand surge that we get is in the rearview mirror", said John Kilduff at Again Capital. The number of active oil rigs in the United States rose steadily in 2017.

Meanwhile, U.S. production is still rising.

The brewing troubles in the Organisation of the Petroleum Exporting Countries's (Opec) third-largest producer have, however, not hit the country's oil output so far.

"The protests in Iran added more fuel to the already bullish oil market mood", said Norbert Rucker, head of commodity research at Swiss Bank Julius Baer. USA crude rose 20 cents to $61.83 and also touched the highest since May 2015.

"The inevitable resumption of growth in the U.S. will likely nudge crude stockpiles higher again in 2018", said Morningstar analyst Joe Gemino.

Brent crude futures rose to $68.27 a barrel this morning, a high not seen since May 2015, before edging down slightly to $68.18 a barrel at the time of writing.




Brent crude, the worldwide benchmark, was unchanged at as high as $68.2. Domestic demand was also higher: USA product supplied for crude oil and petroleum products was at the highest level since 2007.

This has helped tighten markets.

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Thursday morning, showing that U.S. commercial crude inventories decreased by 7.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 424.5 million barrels. Economists had projected that crude in USA storage would decline by 5.7 million barrels.

But given that Iran's oil production has not been affected by the unrest, and that United States production will likely break through 10 million barrels per day (bpd) soon, a level so far only reached by Saudi Arabia and Russian Federation, doubts are emerging whether the bull-run can last. The cartel expects that the crude market to balance this summer and run at a small deficit in the second half of 2018.

Julius Baer's Ruecker said crude prices above $60 project an "overly rosy picture".

Tensions in Iran have also sparked fear that there could be an impact on oil production in the region, according to Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston.


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