The fall in the value of the dollar has boosted oil prices: on 23 January, Brent crude traded at $69.41 a barrel, up 0.54 percent, while WTI crude was at $63.89, up 0.5 percent. Later, on 29 January, WTI crude traded above $66 a barrel, the highest since December 2014. Thanks to shale oil, US crude oil production is poised to break records by surpassing 10m barrels a day in 2018. The country’s net imports of crude oil and petroleum products fell below 2.5m b/d late last year, the lowest since the early 1970s.
The growth in world economy identified by the IMF and others has had a positive effect on oil prices as fuel consumption rises: world oil demand will reach 99.1m b/d this year, up 1.3m b/d on last year, the International Energy Agency estimates. Bank of America projects average prices of $60 a barrel for WTI and $64 for Brent in 2018.
At Davos, Saudi energy minister Khalid al Falih said he remained concerned about the market situation: "I'm still anxious about the fragility of the market (and) about the potential black swans that may spring in front of us. By and large, we are on our way, but we are not there yet."
The minister urged global oil producers to extend their cooperation beyond 2018. He also raised the possibility of a new form of agreement rather than continuing with the same level of production cuts. He added:” "I think there is an acceptance that we need to extend this framework of OPEC and non-OPEC cooperation, in one way or another, beyond the current agreement."
The current deal, struck by OPEC and 10 other allied producers, is scheduled to last throughout the calendar year. It is thought to have supported the recent oil price rally and helped to clear a global supply overhang. Robust demand in China, India and the U.S. — as well as the ongoing production cuts from OPEC and its allied producers — could help to rebalance the oil market this year.
February 1, 2018