A almost 200% jump in oil prices over the past two-plus years could soon create a "particularly hostile environment" for global investors, Citibank economists warned Monday.
"The geopolitical tinderbox around the Middle East seems to be encouraging buyers, while global supply demand fundamental are staying "strong enough" to keep the sellers at bay for now", analysts at TAC Energy said. "Oil has scope to appreciate this week on the back of OPEC output cuts, heightened geopolitical tensions, and optimism over stronger global oil demand".
In its Monthly Oil Market Report (MOMR) released Monday, the cartel raised its forecast for global oil demand as it now expects the world to consume 98.85 million barrels per day, up 1.65 million barrels a day from previous year. "If the complex can break above the multiyear highs set last week, the charts suggest we could see another 5-10% of upside near term".
The most recent EIA study, included in the agency's short-term energy outlook, showed that global production of oil outside Iran averaged 92.4 million barrels per day from February to March, compared to 91.0 million bpd from 2015 to 2017.
Otunuga told Arab News that the price of oil has further room to rise this week.
Those data added to a healthy picture of global oil production as producers pounce on higher prices.
The number of rigs drilling for oil in the USA rose by 10 last week to 844 rigs, the highest in more than three years.
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Brent crude was up 20 cents at 77.32 dollars a barrel by 1315 GMT and USA light crude rose 10 cents to 70.80 dollars.
"The commitment of Saudi Arabia and the rest of OPEC to the production cuts is a major factor in supporting the price at the moment as well as the possibility of reduced exports from Iran due to sanctions", said William O'Loughlin, investment analyst at Rivkin Securities.
OPEC will discuss whether the production caps should be adjusted at a meeting next month. Gasoline futures rose 0.52% to $2.2002 a gallon.
Crude oil prices have increased more than 10% over the past month after President Donald Trump signaled it is likely the USA will withdraw from a 2015 worldwide agreement with Iran that eased sanctions in return for curbs to the country's nuclear program, the Wall Street Journal reports.
"The issue of sanctions on Iran is likely to preclude any more pronounced price slide", Commerzbank analysts said in a note.
Prices received a boost last week following President Donald Trump's announcement on May 8 that the United States would withdraw from the Iranian nuclear deal.