Published: Sat, January 13, 2018
Markets | By Terence Owen

Could crude oil go even higher by the end of 2018?

Could crude oil go even higher by the end of 2018?

As we roll into 2018, the higher oil prices continue to drive increased USA shale production, and set the stage for yet another year of the OPEC-shale tug-of-war that will influence the price of oil. U.S. West Texas Intermediate (WTI) crude futures traded broadly flat at around $60.40 a barrel by 1425 GMT after hitting $60.74 earlier in the day, their highest since June 2015.

The Indonesian Crude Price (ICP) recorded the highest value in December 2017 owing to the impact of the Organization of the Petroleum Exporting Countries (OPEC) policy, the Energy and Mineral Resources Ministry (ESDM) stated.

Tensions between Iran and Saudi Arabia, Opec's largest producer, are also running high, particularly over the war in Yemen.

Meanwhile, there are reports that the protests sweeping the nation are being used as a cover for militants operating within Iran, giving them the opportunity to strike at key infrastructure and oil production facilities.

"There is enough support for prices with the cold in the USA and the geopolitical factor", said Olivier Jakob, oil analyst at Petromatrix.

Brent crude, the global benchmark, on Friday settled up 23 cents at $68.07 a barrel after hitting a high of $68.27 earlier in the session.

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Operational environment is strong, production of oil & gas is expected to rise by over 30 percent in next four years and EBITDA is likely to increase given higher realisations, analysts suggest.

The Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day (bpd) as part of a deal with Russian Federation and other non-OPEC producers. This means U.S. supply is now close to parity with top producers, Russian Federation and Saudi Arabia, and, according to the IEA earlier in the year, will likely create a supply surplus in the first half of 2018. Strong demand growth, especially from China, has also been supporting crude.

Oil prices fell Friday as some investors cashed in on the week's strong gains and others mulled ambiguous USA inventory data. Analysts and traders surveyed by The Wall Street Journal on average expect that stockpiles declined by 4.7 million barrels in the week ended December 29.

OPEC led cuts are assisting to reduce global inventories.

"All New Mexicans benefit from a strengthened economy anchored by oil and natural gas, and can expect these trends to hold up for the foreseeable future as market prices continue to steady and if New Mexico remains a favorable place for oil and gas producers to do business". Another concern is Venezuela, where dire economic conditions have taken a toll on oil production.

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