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article imageOil hits highest prices since mid-2015, then dips

By Karen Graham     Jan 2, 2018 in Business
Both Brent Crude and West Texas Intermediate (WTI) started trading in 2018 above US$60 a barrel for the first time since January 2014, before prices collapsed.
Prices eased on Tuesday morning after hitting mid-2015 highs in early trading, even as major pipelines in Libya and the UK restarted and U.S production soared to the highest level in more than four decades. The rally was spurred by anti-government sentiment in Iran and ongoing supply cuts led by OPEC and Russia, according to CBC News Canada.
Analysts saw strong demand and tightening supply as the reason for the rise in prices, citing the restart of the Forties oil pipeline on December 30. The pipeline was shut down in early December to repair hairline cracks, which sent Brent soaring as the pipeline supplies some 450,000 bpd of crude oil to the UK.
And it helped that there was a resumption of production in Libya after a pipeline blast took off somewhere between 70,000 and 100,000 bpd from daily production. The pipeline was repaired by December 31 and production has gradually resumed.
A handout photo provided by the office of Iran's supreme leader Ayatollah Ali Khamenei on Janua...
A handout photo provided by the office of Iran's supreme leader Ayatollah Ali Khamenei on January 2, 2018, shows him delivering a statement in the capital Tehran
WTI hit a high of US$60.68 a barrel in mid-morning Asian trading before retreating somewhat to US$60.64, while Brent crude booked a high of US$67.23 a barrel before slipping to US$67.20.
Iranian unrest makes market bullish
"Growing unrest in Iran set the table for a bullish start to 2018," the U.S.-based Schork Report said in a note to clients on Tuesday. Iran's Supreme Leader told the media "Iran's enemies" ware stirring up unrest as the death toll from anti-government demonstrations that began last week rose to 21 as of Tuesday.
Iran is OPEC's third largest crude oil producer and the Iranian Oil Ministry and shipping concerns say the political unrest has not affected oil production or shipments.
"Geopolitical risks are clearly back on the crude oil agenda after having been absent almost entirely since the oil market ran into a surplus in the second half of 2014," Bjarne Schieldrop, chief commodities analyst at SEB, said, also citing Kurdistan and Libya.
Prices as of January 2  2018 at 1:41 p.m.
Prices as of January 2, 2018 at 1:41 p.m.
Yet while production cuts by OPEC countries have seemingly helped to buoy up prices, the cuts are expected to carry through 2018. But rising U.S. production, which is expected to pass more than 10 million bpd, this year, is not helping the crude oil outlook going into 2018.
"We think U.S. tight oil production growth warrants close monitoring as it could spoil OPEC's market-balancing efforts, pushing the market into surplus in 2018," Barclays bank said.
More about Oil prices, benchmark, Iranian political unrest, Opec, supply cuts
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