Only a few months back, oil and energy analysts were mute to any future upward expectations in the international oil prices. However, add a mix of geopolitical tensions and possible supply – cut extensions beyond March, prices have rallied since. Analysts have raised expectations; markets are extremely optimistic and oil benchmark prices are looking poised to gain further momentum in the coming months.
The possibility of OPEC led supply restriction throughout the whole 2018, coupled with expectations of strong oil demand fueled by economic growth and concerns over new sources of supply due to years of underinvestment after the 2014 crash has prompted some investors to even raise alarm bells for an impending supply crunch.
Brent crude futures, the international benchmark for oil prices, were at $60.78 per barrel at 0343 GMT. That was 12 cents below their last settlement, but still not far off the highest level since July 2015 reached earlier this week and up some 37 percent since their 2017-lows last June.
U.S. West Texas Intermediate (WTI) crude futures were at $54.05 a barrel, 10 cents below their last close. But that was still near their highest level since February and up around 28 percent since 2017-lows marked in June.
The recent bullish run is being fueled by changing dynamics in the supply markets, OPEC and Russia continue to lend support to extension in cuts which is holding back around 1.8 billion barrels per day. The pact runs to March, 2018 but Saudi Arabia and Russia continue to voice extension well beyond the March deadline.