Oil sees four-month rise to $56
September 21—Talk of war on North Korea by United States President Donald Trump early in the week and hints by major producers to reduce output once again, caused oil prices to rise to a four-month high. Two category-5 hurricanes were also an added factor.
The November price for the benchmark Brent crude went up $1.15 to $56.29 a barrel on Wednesday. However even better news for potential producers like Uganda, is the latest International Energy Agency (IEA) inventory report that anticipates higher demand in the coming months of 2017 as several industrialized countries show small spikes in demand. According to IEA, demand went up by 2.3 million barrels per day (mb/d), or 2.4 per cent, in the second quarter of 2017.
The IEA inventory report published last week states that robust demand in OECD countries was a key factor in the second quarter of 2017’s global growth of 2.3 mb/d, the highest quarterly year-on-year increase since mid-2015. ‘Consequently, our estimated demand growth for 2017 has been increased to 1.6 mb/d. On the supply side, global production fell in August for the first time since April, with lower output from OPEC countries being one factor but also, following a fall in month-on-month production in June, US crude production has been affected by Harvey from a lower base than we anticipated’.
IEA said, ‘Oil prices have recently settled down after the disturbance brought by Hurricane Harvey and, indeed, Brent crude values have increased to levels last seen in early April and the market is now in backwardation, albeit a shallow one. Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly’.
One industry source told 256BN a price of $70 would be “very ideal” for getting Uganda’s nascent production plans into a higher gear, but “…something of a catastrophe of major international proportions must happen to see a price like that anytime soon,” he said.