By Henning Gloystein
SINGAPORE (Reuters) – Oil costs gave away earlier gains on Wednesday as analysts warned of a downward correction once costs have gained quite thirteen % over the past month.
Despite the decline, overall oil markets remained well supported on the rear of adjustment offer and robust world demand. The tighter fundamentals raised each crude futures benchmarks regarding thirteen % higher than levels in early December, helped by production curbs by world organization and Russia, in addition as by healthy demand growth.
Brent crude futures (LCOc1) were at $69.07 a barrel at 0441 UT, down from a high of $69.37 earlier within the day and eighteen cents below their last shut.
Brent on weekday rose to $70.37 a barrel, its highest since December 2014, that was the start of a three-year oil worth slump.
U.S. West Lone-Star State Intermediate (WTI) crude futures (CLc1) were at $63.68 a barrel, down five cents from their last settlement. WTI rose to $64.89 on Tues, additionally the best since December 2014.
Norbert Ruecker, head of artifact analysis at Swiss bank Julius Baer, same a worth “correction ought to occur… (as) hedge fund expectations for additional inflation have reached excessive levels.”
He same this was particularly the case as political risk factors that have helped boost brent goose, as well as tensions in Qatar, and therefore the Kurdish region of Asian nation and in Islamic Republic of Iran have to this point not caused vital offer disruptions.
Money managers have raised the bullish positions in WTI and Brent crude futures and options to a record, according to data from the U.S. Commodity Futures Trading Commission and the Intercontinental Exchange.
Wang Tao, Thomson Reuters commodity analyst, said Brent may fall to around $68.50 a barrel due to technical chart indicators.
Still, traders and analysts said overall oil markets were well supported, and steep price falls unlikely.
The Organization of the Petroleum Exporting Countries (OPEC) and Russia have continued to withhold production since January last year and the cuts are set to last through 2018.
This restraint has coincided with healthy oil demand.
“Oil remains underpinned by the solid economy with strong oil demand tightening global oil inventories. The past years’ surplus supplies are slowly disappearing,” Ruecker said.
One factor that in 2017 prevented crude prices from rising further was a surge in U.S. production.
Despite a recent drop due to extreme cold, U.S. crude output is expected to soon break through 10 million barrels per day (bpd), challenging top producers Russia and Saudi Arabia.