Oil prices shoot up after New York City explosion

December 12, 2017 2:06 pm

Oil prices rose yesterday as an explosion in one of New York City’s busiest transit hubs and expectations that cold weather will increase demand for fuel helped lifted prices.

U.S. crude futures recently rose 20 cents, or 0.35%, to $57.56 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 64 cents, or 1.01%, to $64.04 a barrel on ICE Futures Europe.

Prices rose Monday morning after a Bangladesh man tried to set off an explosive device at New York City’s Port Authority Bus Terminal.

“When the market get scared the hard assets tend to get bid up,” said John Kilduff, founding partner at Again Capital.

With the Organisation of Petroleum Exporting Countries, OPEC, extending production cuts to the end of 2018 and USA’s Shale still pumping, an analyst in  the international oil market has predicted oil at $55 per barrel mid-June, 2018.

Brent and WTI had settled more than 1.0 percent higher on Friday, and oil prices have gained well over a third from 2017 lows.

The OPEC secretariat stated that the price of OPEC basket of fourteen crudes stood at $61.03 a barrel on Friday, compared with $60.12 the previous day

“The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).”

In an interview with Forex Times, Research Analyst, Lukman Otunuga, he stated that its unlikely for the market to expect oil boom anytime soon, with the U.S Shale production rising and the oversupply concerns still a lingering theme.

According to him, “If OPEC fails to enforce “extraordinary measures” in Junes meeting next year, the disappointing has the ability to instill bears with enough inspiration to drag prices below $50 towards $45 by year-end which is coincidentally the same prediction in Nigeria’s 2018 budget.

“Sentiment remains bearish towards oil long-term with the International Energy Agency (IEA) already sharing a gloomy outlook for oil demand. For oil markets to bounce back U.S Shale and OPEC may have to work hand in hand in limiting production to decrease global supply.”

He projected that the prices for crude will remain below the psychological $60 level this year, stressing that, “With OPEC simply extending production cuts to the end of 2018 and U.S Shale still pumping production, this could invite a further decline towards $55 early 2018 and $50 mid-2018.

Oil prices initially were supported by supply-side factors such as the conflict in Iraq and US-Iran tensions which sparked discussions of a potential drop in global supply.

Lookman noted that, the reports of the shutdown of a major crude pipeline from Canada to the United States attributed to oil’s recent upside with the commodity finding comfort near two-year highs.

“With U.S Shale production on the rise and obstructing OPEC’s efforts to rebalance oil markets, WTI Crude remains exposed to downside risks. Taking a looking at the technical picture, investors will continue to observe how prices react below the psychological $60 level this year. Sustained weakness below back below $56 could promote further downside.”

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