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Oil Prices Hit Three-Year Highs on Growth, Geopolitics

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Oil Prices Hit Three-Year Highs on Growth, Geopolitics

U.S. West Texas Intermediate (WTI) crude futures had risen to US$61.67 a barrel by 9:22 a.m. ET, 23 cents USA above their last settlement. Brent hit $68.27 high last week, the highest since May 2015.

Unrest in Iran, OPEC's third-largest producer, has lent support to prices this year although output and exports have not been affected. Reinstating economic sanctions could limit Iran's oil exports.

Mr. Trump's decision comes on the heels of antigovernment protests in Iran last week, which also boosted the price of crude.

Supply reports this week from industry group the American Petroleum Institute and the US government's Energy Information Administration are expected to show USA crude stocks fell 3.9 million barrels, an eighth week of decline.

"The fact that the crude benchmarks are establishing highest levels since spring of 2015 on very little fresh fundamental input continues to suggest a strong market underpinning", said Jim Ritterbusch, president of Ritterbusch & Associates, in a Tuesday note.

A key U.S. government report on Wednesday is expected to show crude stockpiles dropped for an eighth straight week.

"We expect oil demand growth to outpace non-OPEC supply growth in both 2018 and 2019", analysts stated.

Oil Prices Hit Three-Year Highs on Growth, Geopolitics
Oil Prices Hit Three-Year Highs on Growth, Geopolitics

On Tuesday, the price of oil climbed higher reaching its highest level seen since May 2015, propped up by OPEC-led production cuts and the belief that US crude inventories have fell the eighth week in a row.

"Production cuts and demand are continuing to rebalance the market".

The agreement, which was implemented at the start of 2017, was meant to rein in the global supply glut and raise prices.

US oil and gas production will continue to increase in 2019 as well, to the chagrin of OPEC and Russia-major exporters looking to curb production and reduce competition from American shippers.

In its Short-Term Energy Outlook, released Tuesday, the agency said it expects USA production to break above 11 million barrels per day in November 2019.

Despite this, US production is expected soon to rise above 10 million barrels per day, largely thanks to soaring output from shale drillers.

Futures advanced 0.5 percent on Monday, settling near $62 a barrel in NY.

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