The surge in oil prices comes at a time of tight supply amid record Asian demand and voluntary output restraint by the Organisation of the Petroleum Exporting Countries and non-OPEC producers, including Russian Federation. "Oil has scope to appreciate this week on the back of OPEC output cuts, heightened geopolitical tensions, and optimism over stronger global oil demand".
Oil demand growth, meanwhile, should average 98.85 million barrels per day for 2018, an increase of just 25,000 barrels per day from the April forecast. "If the complex can break above the multiyear highs set last week, the charts suggest we could see another 5-10% of upside near term".
USA crude prices are at the steep discount to Brent as a more than 25 percent rise in US crude production to 10.7 million barrels per day has left the American market well supplied.
The number of rigs drilling for oil in the USA rose by 10 last week to 844 rigs, the highest in more than three years.
"Although oil could venture higher in the near term, robust production from U.S. shale remains a threat to higher oil prices", he said.
Otunuga told Arab News that the price of oil has further room to rise this week.
Karnataka polls over, petrol, diesel prices rise after 19 day freeze
Indian Oil Corporation chairman Sanjiv Singh had earlier said that his firm had made a decision to "temporarily moderate" prices. The increase in oil prices comes after several weeks, shattering hopes of a normalisation with regards to rising oil prices.
With the USA drillers producing a record 10.7 million barrels a day, according to preliminary weekly data from the Energy Information Administration, the United States is approaching world's top producer Russian Federation, which pumps about 11 million barrels daily.
"President Donald Trump's decision this week to restore punitive sanctions on Iran, OPEC's third biggest producer, has dominated discussion of oil markets and energy stocks", reports CNBC. Gasoline futures rose 0.52% to $2.2002 a gallon.
The combination of subdued economic growth and rampant inflation - also known as stagflation -would likely create a "particularly hostile environment for risk assets", the USA bank added.
Capital Economics analysts said OPEC is well-positioned to offset any fall in output from Iran caused by the re-imposition of sanctions on the country.
While Iran has given European nations a two-month window in which to guarantee that the nuclear deal will remain intact, the U.S.'s hawkish national security adviser John Bolton said Sunday that the U.S.is prepared to impose sanctions on European companies if their governments don't heed President Trump's demand to stop dealing with Iran. With an Iranian diplomatic delegation due to Beijing, Moscow and Brussels this week, investors would be closely watching for any further geopolitical headlines, Mr. Hansen added.
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