Oil’s rally is continuing, with benchmark Brent crude now trading at a two-year high above $US69 a barrel.
Prices climbed by as much as 2% overnight and have since consolidated in Asian trade. It marks a gain of around 11% since mid-December.
Developments in the middle east provided the catalyst for the latest rally, according to Greg McKenna at AxiTrader.
“What’s driven the price action overnight is continued focus on the fact OPEC won’t move quickly to plug any disruptions to supply from either Iran or Venezuela,” McKenna said.
“Equally there is some chat of the re-imposition of sanctions on Iran by President Trump.”
At the end of November last year, OPEC member nations along with Russia agreed to extend production cuts to the end of 2018.
In its Short-Term Energy Outlook released yesterday, the US Energy Information Agency (EIA) forecast Brent crude prices to average $US60 a barrel in 2018 and $US61 a barrel in 2019.
The recent rally in US-based West Texas Intermediate (WTI) crude has been equally sharp. WTI prices have consolidated today above $US63 a barrel. Here’s the chart:
A Reuters report overnight said Iran’s oil minister expressed concern about the recent price rally, on the grounds that US shale producers now have the impetus to ramp up shale oil production with prices at current levels.
Later tonight the EIA will release its weekly summary of US oil inventories. The figures have shown a stock draw-down every week since the middle of November.