According to experts, oil prices rose to a three-year high on Wednesday as ongoing antigovernment protests in Iran, the Wall street Journal reported. However, some traders are questioning the associated risks of hanging out too long above those levels, especially the risks related to the impact on the demand, while other analysts cast doubts that there exists an upside for prices above these levels and qualify the current market situation as "an overly rosy picture".
The market has been in process of pricing in a ramped-up level of geopolitical risk following the anti-government protests in OPEC member Iran, which has more than offset any concerns about prospects for rising US crude supply. This policy then led to a rise in global oil prices that also affected the ICP.
Production in Venezuela, where the oil industry is starved of funds due to a cash crunch, has fallen further below its OPEC target, the survey found.
EIA also said crude oil export volumes and the number of destinations for those exports continued to increase.
"Beyond the recent focus on street protests, the potential reinstatement of U.S. sanctions targeting the Iranian oil industry remains an issue", JBC analysts said. Brent crude futures, the worldwide benchmark, were also flat at around $66.80 a barrel after hitting a May 2015 high of $67.29 earlier in the day.
Meanwhile, a major winter storm this week helped support prices for crude and products, on worries that freezing temperatures could affect refinery infrastructure and lead to a spike in demand for materials such as diesel and heating oil. Compliance has been high, as producers have chose to extend the supply pact until the end of 2018.
OPEC members have a poor track record of sticking to agreed quotas, but they kept within 95% of the required cuts, with Saudi Arabia cutting further, meaning the aggregate production cut held.
In the past, waning compliance as oil prices rallied has reduced the effectiveness of OPEC accords.
Oil prices fell Friday as some investors cashed in on the week's strong gains and others mulled ambiguous US inventory data.
IEA puts commercial stocks about 111 million barrels above the prior five-year average at the end of October (Oil Market Report, IEA, December 2017).
It said the OPEC agreement to curtail crude oil production in 2017 and subsequent extension of that agreement through 2018 tightened crude oil supplies, which put upward pressure on crude oil prices.
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