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New Year's Oil Price Rose To More Than 60 US Dollars Per Barrel Is Still Subject To The United States Shale Oil Production - Part One

- Jan 04, 2018 -

International oil prices ushered in a strong start in 2018. On January 2, both international oil prices opened above $ 60 a barrel, representing the best annual start since January 2014.

As of January 2 deadline, the United States WTI futures reported 60.30 US dollars a barrel, the day earlier hit a high of 60.74 US dollars since June 2015, Brent crude oil futures 66.74 US dollars a barrel, the day earlier rose to 2015 May highest 67.29 US dollars.

 

The correlation analysis indicates that the recent turmoil in Iran is one of the drivers behind oil prices because the country is a major oil producer. According to Xinhua, since December 28, 2017, anti-government protests have erupted in various cities in Iran. People protest against high food prices, young people cannot find jobs and Iran's Middle East foreign policy.


Iran turmoil push oil prices cut agreement extended for the second time

 

According to the official website of the US, Energy Information Administration shows that Iran has the world's fourth-largest crude oil storage capacity, one of the world's top ten oil-producing countries. Before the United States and Europe imposed sanctions on Iran, the country's crude oil output has been declining for a long period of time to 3 million barrels per day or less. Since then, crude oil production has started to recover since sanctions were lifted in early 2016. According to the most recent monthly report of the Organization of the Petroleum Exporting Countries (OPEC), the country's crude oil production in November 2017 was 3.818 million barrels per day. According to another OPEC official agreement reached by the end of November 2016 agreement on the reduction of production shows that from January 2017 onwards, Iran's crude oil production was limited to 379.7 barrels per day.

 

"Iran has many demonstrations and riots in the near future, which will have a certain impact on the international oil prices in the near term." On January 2, Mr. Qian Xu Ming, an associate researcher at the Shanghai Institute of Middle East Studies at the Shanghai International Studies University, told the 21st Century Business Herald.

 

In addition to Iran's turmoil boosted oil prices, there are signs that the fundamentals of global crude oil seem to be continuing to improve the market sentiment improved.

 

A report released Friday by the U.S. Commodity Futures Trading Commission (CFTC) shows that large investors such as hedge funds have raised their willingness to expect crude oil. As of Dec. 26, 2017, the net speculative net long position The previous week increased 30322 futures and options contracts to 632161 contracts.

 

Goldman Sachs and Morgan Stanley both raised their forecasts for oil prices by late 2017 on the basis that OPEC-led production cuts were better than previously expected.

 

From the supply side, the end of November 2016, OPEC oil-producing countries and Russia, represented by non-OPEC oil producing countries reached a cut agreement, agreed to begin in 2017, a daily output of 1.8 million barrels for a period of six months, after the agreement reached the oil price, However, the effect after that may have subsided. The participating countries agreed at the end of May 2017 to extend the cut-off deadline to the end of 2017. On December 1, 2017, in order to once again support the price of oil, the participating countries of the production cutoff agreement extended the cut-off deadline again, extending the deadline originally scheduled to expire in March 2018 to the end of 2018.

 

OPEC's monthly report released on December 14, 2017, shows OPEC expects the global oil market will be able to strike a balance by the end of 2018 due to a further reduction in inventories due to the prolonged cut-off period.