Survey reveals expectations of $75 ceiling for oil

Crude oil prices are up more than 4 percent since the start of January, far overshadowing the hype over the previous psychological threshold of $50 per barrel.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Jan. 16, 2018 at 6:14 AM
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Jan. 16 (UPI) -- Though crude oil prices are up more than 4 percent since the start of January, a survey of North American sentiments forecasts a narrow range.

The price of crude oil is up more than 4 percent so far in the 11 global trading days of the year. Prices have moved generally higher since the middle of last year, supported by a drain on the market surplus that dragged heavily on the sector three years ago.

Late last year, the situation was supported further when the Organization of Petroleum Exporting Countries decided to extend its effort to balance the market with production cuts through 2018. Now, demand outlooks have improved and geopolitical risk, from the outlook in Iran to tensions over North Korea, has added a premium to the price of oil.

A survey of 313 respondents who told energy news and data site Rigzone they worked in North America revealed mixed support for the direction in crude oil prices. Results showed 43.9 percent of those taking part in the emailed survey felt oil prices would hover below $65 per barrel, while 43.6 percent said the range would be somewhere between $65 per barrel and $75 per barrel.

The price Brent crude oil closed above $70 per barrel for the first time since December 2014 during a trading session Monday lightened by a federal holiday in the United States. The global benchmark lost grip on the psychological threshold by early Tuesday, slipping to around $69.60 in the overnight session.

About half of the total estimated 1,000 respondents taking part in the Rigzone survey from Nov. 16 through Dec. 1 supported a range that put $75 per barrel at the ceiling.

In a monthly market report for October, the International Energy Agency said that, for 2018, three out of the four quarters will show a market more or less in balance, assuming OPEC output stays the same and there are no major unforeseen disruptions.

Taken as a whole, however, total demand and non-OPEC production, namely U.S. shale, will grow more or less in parallel, and "that might act as the ceiling for aspirations of higher oil prices," the report read.

In its short-term market report for January, the U.S. Energy Information said it expected the average price for Brent crude oil for 2018 will be $60 per barrel. That report was published Jan. 9, in the midst of the year-opening rally.

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