Oil prices dip as United States dollar increases
- Author: Rita Burton Feb 23, 2017,
Feb 23, 2017, 0:43
Speaking on the future of crude oil in the global market, he said there appears to be a "consensus over increasing demand for crude oil, which could last for another 30 year".
That's only a partial picture of the state of global oil supply, but the International Energy Agency has yet to publish an estimate of how the first month of OPEC cuts affected international inventories. Weak sentiments on account of rising production and rig counts in the U.S. will lead to a correction in oil prices.
"The short-lived recovery of world oil prices is already in danger", says the Daily Telegraph, citing expert analysis of export data showing that the reality of Opec cuts is far less significant than the headline reduction in production being claimed. Saudi Arabia has increased oil shipments to Canada from 73,000 bpd in 2014 to close to 87,000 bpd past year.
While confidence has returned to the oil market due to agreed output curbs, it is too early to say whether the landmark OPEC and non-OPEC supply deal should be extended, the group's secretary general said on Tuesday.More news: Trump to pick Alexander Acosta as new nominee for labor secretary
US West Texas Intermediate April crude contract dropped 37 cents to touch $53.99 a barrel, while Brent crude was down by 44 cents to be traded at $56.83, reported Reuters. On the negative side, OPEC's secretary general also repelled speculations that producers could enlarge their output cuts after the first half of this year. Below this level, oil supply rationing and rapid EM demand growth should push prices higher.
The price of oil appears to have stabilized just north of $50 per barrel, but some analysts are calling for a 40 percent plunge. WTI-Brent spread was stable on Feb-2017. Inventory levels are still very high in many parts of the world, particularly in the United States.
While this could undermine the oil rally, it is not expected to prompt a return to the 13-low of $28 a barrel reached this time past year.
Oystein Berentsen, managing director for crude oil trader Strong Petroleum in Singapore, said arbitrage for North Sea and US oil to Asia has been possible due to the OPEC-led cuts, and these routes "may continue depending on freight and price spreads".