Citigroup Bullish on Oil Prices Because of Trump's Wars

Mae Love
January 13, 2018

Crude oil prices ended 2017 at $60/barrel (b), the highest end-of-year price since 2013.

According to the source, the price for February Futures WTI oil dropped by 0,13% totaling to $63,49 per barrel on the New York Mercantile Exchange (NYMEX).

West Texas Intermediate (WTI) crude, the benchmark price for USA and Canadian crude oil, traded at a high of $65.53 on the NYMEX.

"Oil prices have been undeniably bullish this week despite the lingering concerns over the current bull rally running out of steam", said Lukman Otunuga, research analyst at FXTM. "It's not completely unexpected, given the price momentum. But there will be a reaction in US shale, and OPEC's strategy will backfire massively".

USA crude oil production is forecast to average 10.3 million b/d in 2018, marking the highest annual average production in US history, surpassing the previous record of 9.6 million b/d set in 1970.

The RAC signalled pump costs were likely to reflect the march of Brent crude - damaging the economy at a time drivers and businesses could ill afford it.

Bloomberg reported that OPEC's strategy to end a worldwide crude glut is causing havoc for a vital link in the oil industry's supply chain: the fleet of supertankers that shuttle fuel between continents.

Last year, Opec and other nations including Russian Federation said they would extend a deal to cut production to help support oil prices that had fallen below $50 a barrel when the agreement was struck in 2016.

Analysts surveyed Monday by S&P Global Platts expect crude stocks fell 3.5 million barrels last week.

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The price for Brent crude oil was down 0.13 percent as of 9:17 a.m. EST to $69.11 per barrel.

And in addition, oil-burning power plants in New England which rarely get used all year have been running hard, contributing one-third to ISO New England's power generation fuel mix at times.

However, the decline in crude inventories in the United States during the latter half of 2017 have helped oil prices recover and rally further before the year ends trading to as high as $68 per barrel during the first trading session of 2018.

Q: How are we to understand the effects this will have on the crude oil market? Export price index is expected to be 0.3%, down from 0.5% a month ago.

Prices have fallen for three years straight since then because of a meeting between oil-producing nations on Thanksgiving where Saudi Arabia, the biggest oil exporter, said it would not curb output to balance out an global glut.

Import and Export Prices for December will be issued at 8.30 am ET.

US commercial crude stocks fell to 419.5 million barrels in the week to January 5, right near the five-year average, the target for OPEC and others cutting output.

What's the Fair Price of Crude Oil Today?

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