But physical markets for oil shipments tell a different story. Saudi Arabia has been condemning that Iran used economic gains from the lifting of sanctions to continue its activities to destabilize the region, particularly by developing ballistic missiles and supporting terrorist groups in the region. “So I wouldn’t be surprised to see $100 per barrel in the coming months”.
Both demand and supply have driven the steady recovery in prices.
Crude imports rose 278,000 b/d to 7.601 million b/d, and the refinery utilization rate increased 0.7 percentage point to 91.1% of capacity.
Venezuela and Nigeria are among the cartel members beset by political turmoil, while Iran may be hit with harsh USA sactions that could effect the oil industry.
US shale production has been in the ascendency amid OPEC and non-OPEC production cuts, with higher prices making production viable.
USA light crude CLc1 was seen averaging $66.62 a barrel this year and $67.09 a barrel in 2019.
But there are signs in physical crude markets that may give pause to financial investors.
A rapid decline in Venezuela’s crude production has further roiled markets in recent months.
Chinese executives did not make firm commitments but said as state oil companies they will fall in line with Beijing’s wishes, the person said. As prices have risen and geopolitical crises have taken hold, industry analysts and traders have questioned when global producers will begin to unwind their deal, in place since 2017, to curb supply.
The general public has starting feeling the pinch in their wallet as the oil prices have now climbed to five-years high and are unlikely to go down anytime soon.
Are speculators hesitant to short the market (bet on lower prices) as long as OPEC commits to reducing supply?
Goldman Sachs, though, said even with a slowdown in demand and soaring USA output, global oil markets would remain tight.
OPEC crude oil production in April decreased by 130,000 barrels a day to 31.65 million barrels, largely due to further deterioration in Venezuelan production and lower output from Africa. “Russia also becomes a source, and if Russian Federation can upset the US, they will do it”.
US West Texas Intermediate (WTI) crude futures were up 64 cents at $72.13 a barrel, also their highest since November 2014.
“In its monthly report, the Paris-based IEA cut its forecast for global demand growth in 2018 to 1.4 million barrels per day, from a previous estimate of 1.5 million bpd”. Capital expenditures in non-OPEC grew by only two percent in 2017, and are still 42 percent below 2014.
After the US’ decision to withdraw from the Iranian denuclearization deal, oil prices have elevated as traders wait to see how the Middle East will stabilize following the re-imposition of hefty USA sanctions on Iran trade. “The price is pretty good and we’re not seeing any growth outside the USA”, said the investor.