Oil cracks $60 after OPEC report says 2018 will be a year of higher demand

West Texas Intermediate crude oil is back above $US60 a barrel after last week’s selloff sent below that level for the first time this year. WTI dipped to nearly $US58 last week from a high of $US66 on January 25, but Monday’s gain of 1.76%, which came after OPEC said it expects higher oil demand this year, has the energy component trading at $US60.09.

OPEC said the healthy world economy should provide the backdrop for faster-than-expected oil demand, Reuters reported. The cartel expects demand to rise by 1.59 million barrels per day in 2018, up by 60,000 barrels from its previous forecast.

However, the higher prices will also encourage non-member producers, such as the US, to pump more oil, contributing to a worldwide glut.

OPEC producers agreed to cut supply in November 2016 in order to reduce the glut that had accumulated over the previous two years. OPEC’s production declined in January, the organisation reported.

Meanwhile, OPEC expects non-OPEC producers to increase their supply by 1.4 million barrels this year. The organisation maintained that the market will eventually “return to balance”by the end of the year.

Brent Crude, the international benchmark, was trading up 1.37% at $US63.62.

Read more about what Wall Street thinks about oil’s rally this year.

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