Oil Prices Slip From Three-Year High

Brent crude breaks $70 a barrel level for first time since 2014

Oil Prices Slip From Three-Year High

Oil prices have hit a three-year high, reaching almost US$70 a barrel, signaling a strengthening outlook for the sector in 2018.

US West Texas Intermediate (WTI) crude futures settled at $63.94 a barrel, up 37 cents, the highest since December 2014.

Fuel price hedging company Global Risk Management said in its 2018 outlook that "the likelihood of elevated oil prices this year seems imminent", largely due to the ongoing supply cuts led by OPEC and Russian Federation as well as political risk especially in Iran, Venezuela and Libya.

Oil Prices Slip From Three-Year High

Because crude oil prices are expected to be relatively flat through 2019, US gasoline prices are also expected to remain near current levels.

While these seem like muted responses to another remarkable day in trading, other experts were more explicit in stating their misgivings about the high prices: specifically, Stephen Innes, head of trading for Asia/Pacific at Oanda, argued that the fuel market has overheated: "Markets are getting a bit tired, and a healthy correction could be on the cards". It is not completely unexpected, given the price momentum. More recently it was boosted by extremely cold weather in the US and China, along with protests in Iran, where the lifting of worldwide sanctions two years ago hasn't provided the relief expected.

The price spread between Brent and WTI was significantly greater in 2017 than in 2016.

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WTI and Brent soared to three-year highs on Tuesday before the data on the expectation that crude oil inventories would decline yet another week, along with EIA's updated forecast for oil demand growth that shows an increase over previous figures of 100,000 bpd.

Following the same principle and in an attempt to curb the worst oil glut in decades, the 14-member Organization of the Petroleum Exporting Countries (OPEC) cartel, Russian Federation and nine other global producers agreed in 2016 to cut oil output by 1.8 million barrels a day.

Brent crude futures were at $69.15 a barrel, 33 cents, or 0.5 per cent, above their last close. By the way, Iran is the OPEC's third-biggest producer of crude oil. Oil prices opened sharply lower today, dropping more than Rs 50 in early minutes of the trade.

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The benchmark North American oil price hit its highest level since 2014 on Wednesday as two new data points came out showing supplies are drawing down, and an OPEC pledge to turn off the taps seems to be working. The organization reported that oil reserves in the US for the week ended on January 5, decreased by 11.19 million barrels, which is the strongest decline since September 2016.

However drivers across the country are taking price rise as a positive sign as supermarkets are likely to enter the pricr war leading to competitive rate of oil for drivers.

From the middle of 2014 motorists in the United Kingdom began to benefit from falling pump prices, culminating in December 2015 when a few low-priced retailers sold both petrol and diesel for under £1 a litre.

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