Analysis by Dr. Nancy Yamaguchi
WTI crude prices have hit the elusive $50/b mark this morning. Prices have trended up this week, opening higher for four consecutive days. If prices remain strong today, the week will end up $2.00/b-$2.50/b in the black. WTI opened at $47.58/b on Monday.
Crude demand in the U.S. is recovering as refineries come back online following Hurricane Harvey outages. Reports of stronger global oil demand and restrained OPEC output have boosted prices. The International Energy Agency (IEA) revised upward its forecast of global demand in 2017.
OPEC compliance with the production cut agreement rose to approximately 96% in August—and over 101% if only the original eleven participating OPEC members are tracked. Libya and Nigeria are not participating in the cuts, and their output has risen by 500 kbpd between January 2017 and August 2017. These two countries and the U.S. have raised their crude output by around 62% of the OPEC cut target, undercutting the market impact and extending the time needed for supply-demand rebalancing.
Geopolitical tensions have risen again following another missile launch by North Korea. The missile was deemed an intermediate-range weapon, launched over Japan’s northerly island of Hokkaido. It flew approximately 2300 miles, or 3700 kilometers. The distance by air to Guam is 2128 miles, or 3425 kilometers. North Korea has threatened Guam, and appears to be able to reach the island, though the weight of the missile’s payload was not known.
WTI crude opened at $49.72/b this session, an increase of $0.41 from yesterday’s opening. Currently this morning, WTI prices are $50.00/b, up by $0.28 since today’s opening. The daily price range has been $49.41-$50.11/b.
