Benchmark oil futures prices finish strongly in 2017
28 December 2017
Benchmark oil futures prices are finishing strongly the year 2017 with price levels not seen since June 2015. The Brent gained weekly more than 3% while the WTI increased by almost 2%. The bullish factors included the continuous outage at the Forties pipeline, the OPEC+ deal extension, announcements about potential exit strategy after the OPEC+ deal expiry, U.S. crude oil stocks fall combined to a balanced U.S. oil supply system. The bearish factors consisted mainly in the sustained increase in U.S. crude production and an expected restart of the Forties pipeline in early January 2018.
As we argued in a previous report that the oil market needs to know the exit strategy from the OPEC+ deal, it looks like that different options are now under discussion between the OPEC members and their partners to avoid any hard exit. The options would likely mean that the cuts would be extended and reduced through a tapering process depending of course on the market situation and its corresponding assessement. Additionally, Saudi Arabia and Russia pledged last Friday that any exit from the output cut deal would be gradual (Reuters).