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Reasons to affect crude prices in 2018

17 January 2018 18:17 (UTC+04:00)
Reasons to affect crude prices in 2018

By Sara Israfilbayova

Despite the fact that 2018 has just started, there is no lack of factors that affect world oil prices and push them higher.

Particular mention may be made of tensions in Iran, cold weather in the U.S, OPEC+ agreement.

Prices for Brent crude, the international benchmark, have risen nearly 50 percent since June. They briefly passed $70 a barrel more than once in the last week-the first time the per-barrel price has reached $70 since December 2014, according to New York Times.

Experts believe that the OPEC + agreement may lead to the balancing of the oil market in 2018.

Optimistic forecasts for the growth of the world economy for 2018 can lead to a significant increase in oil demand. The International Monetary Fund (IMF) forecasts the world economy to grow by 3.7 percent in 2018. At the same time in developed countries, growth is expected to be 2 percent, and in developing countries – 4.9 percent.

The deal, which was renewed in November and prolonged till the end of the year, has removed around 1 million barrels of crude a day from the global supply.

Earlier, reacting to the three-year price high, Russian Energy Minister Alexander Novak said the oil market was not yet balanced and that the global deal to cut output should continue as the price rise could be due to cold weather.

American production growth has stalled in recent days because of the very cold weather, according to analysts. EIA weekly data shows production was 9.492 million bpd in the week to January 5, down from 9.782 million bpd the previous week.

Moreover, according to analysts the activity of speculators, can also affect the world oil market.

Currently, contracts for growth exceed the contracts for a reduction of seven times. However, analysts do not exclude that, at the slightest discrepancy to forecasts, such a volume of speculative rates can lead to a sharp sell-off, which can also have an impact on the market.

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