Crude oil futures jump to Rs. 4037 per barrel

Crude oil futures jump to Rs. 4037 per barrel

US oil prices hit their highest since 2014 on Wednesday as OPEC-led production cuts and healthy demand helped to balance the market, but analysts warned of possible overheating.

U.S. West Intermediate Texas (WTI) was trading at $62.65/Bbl at 12:25 pm (EST), up 92 cents, or 1.49%, from the previous close. Brent earlier hit $69.37, the highest since May 2015.

Amid the general bull-run, which has pushed up crude prices by more than 13 per cent since early December, there are indicators of an overheated market.

Iranian oil minister Bijan Zangeneh said yesterday "members of the Organization of the Petroleum Exporting Countries (OPEC) are not keen on increased Brent crude prices to above $60 per barrel because of shale oil".

The American Petroleum Institute said late on Tuesday that US crude inventories fell by 11.2 million barrels in the week to January 5, to 416.6 million barrels.

The API releases its data at 4:30 p.m. EST (2130 GMT) on Tuesday and the government report is due at 10:30 a.m. on Wednesday. US stockpiles fell by 14.5 million barrels during that week. Analysts warned that the market is ignoring USA production increases at its peril.

Crude oil futures traded 0.85 per cent higher at Rs 4,037 per barrel at the futures market as speculators raised their bets, taking positive cues from global market.

"We expect oil demand growth to outpace non-OPEC supply growth in both 2018 and 2019", Standard Chartered analysts said in a note.

Many producers, still suffering from a 2014 price collapse, are enjoying the rally, although they are wary it will spur rival supply sources.

Supply reports this week from industry group the American Petroleum Institute and the USA government's Energy Information Administration are expected to show US crude stocks fell by 4.1 million barrels, an eighth week of decline.

Production was expected to rise to an average 10.04 million bpd during the first quarter of this year.

The average price for Asian crude grades has risen to $70.62, Thomson Reuters Eikon data showed, which has pressured the region's refinery margins. "But for now, the bullish trend remains intact as prices remain above key supports".

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