Oil prices try for fresh 3-year highs

A view shows Saudi Aramco's Abqaiq oil facility. Oil prices hit their highest levels on Wednesday since 2014 supported by ongoing production cuts led by Opec as well as healthy demand although analysts cautioned that markets may be overheating. handout

"Members of the Organization of the Petroleum Exporting Countries are not keen on increased Brent crude prices above $60 a barrel because of shale oil", Bijan Namdar Zanganeh said in comments on the ministry's news agency Shana.

Benchmark Brent crude rose further above $68 a barrel on Tuesday, supported by oil output cuts led by the Organization of the Petroleum Exporting Countries and allies including Russian Federation that are due to run until the end of 2018.

USA crude stockpiles at the Cushing, Oklahoma, pipeline hub probably fell by 1.5 million barrels last week, according to a forecast compiled by Bloomberg. US commercial crude inventories fell by 7.4 million barrels (MMBbl) in the week ended December 29, to 424.46 MMBbl, according to data from the Energy Information Administration.

The API releases its data at 4:30 p.m. EST (2130 GMT) on Tuesday and the government report is due at 10:30 a.m. on Wednesday.

A third OPEC source said market fundamentals did not justify the price rally. OPEC appears determined to end the global supply glut with disciplined output quotas in 2018. "We expect to see growth near 2 million barrels per day in 2018 and 1.3 million barrels per day in 2019".

"Production cuts and demand are continuing to rebalance the market".

The rise in prices is expected to drive gains in US production during 2018, offsetting curbs by others.

The report also noted that the North Sea Brent barrel stands at $64 per barrel, which is the highest it has been since November 2014, the start of the oil price crisis.

Saudi Arabian Oil Co.is set to appoint banks, including Goldman Sachs Group Inc. and Citigroup Inc., to help manage its initial public offering, people familiar with the matter said, as the state-owned crude producer pushes ahead with what could be the world's largest share sale.

Some analysts have said a rise in US shale oil production could discourage OPEC and Russian Federation to maintain their deal to curb supply until the end of the year for fears of losing market share.

Despite this, US production is expected soon to rise above 10 million barrels per day, largely thanks to soaring output from shale drillers. "But for now, the bullish trend remains intact as prices remain above key supports".

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