Atheer – External Sources
Oil prices rose on Tuesday, lifted by healthy economic growth, as well as the ongoing supply curbs.
According to Reuters, spot Brent crude futures LCOc1 were at $69.41 at 0409 GMT, up 38 cents (0.55 percent) from their last close, which was not far off the three-year high of $70.37 per barrel on the 15th of January.
US West Texas Intermediate (WTI) crude futures CLc1 were at $63.99 per barrel, up 42 cents (0.7 percent) from their last settlement. WTI hit its highest since December 2014 on the 16th of January at $64.89 per barrel.
Traders said that oil markets were generally well supported by healthy economic growth.
The International Monetary Fund (IMF) revised upward its forecast for world economic growth in 2018 and 2019 on Monday, to 3.9 percent for both 2018 and 2019, which was a 0.2 percentage point increase from its last update in October.
“The economic outlook and seasonally colder weather has led to firmer oil demand growth, facilitating the continuation of a fall in oil inventories toward OPEC’s recent five-year average target,” BNP Paribas said.
This growth, which is also translating into further oil consumption, comes at a time of supply curbs by OPEC and Russia, which began in January last year and are set to hold throughout 2018.
“The outlook for 2018 is roughly balanced for most of the year, but inventories are set to rise in quarter four of 2018,” the French bank said, adding that it has hiked its 2018 oil price forecasts by $10 per barrel, expecting WTI ad Brent to average $60 and $65 per barrel respectively.
There have however also been signs of a possible crude oil downward price correction. Crumbling refinery profits, firstly in Asia and now also in Europe and the United States, as a result of rising feedstock prices and plentifully available fuel products, point to lower crude orders going forward.
Over the long term, investors are preparing for large-scale changes in oil demand coming from the rise of electric vehicles.
Bank of America Merrill Lynch said this week that it expects peak oil demand by 2030 on electric vehicles, which will have replaced conventional vehicles by the year 2050.
The bank also said that “when gasoline demand peaks by 2025 (and total oil by 2030), refinery utilisation rates may decline permanently and refining margins suffer heavily.”
