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Tensions in the Middle East continued to push oil prices up in the international market on Tuesday. Benchmark Brent crude futures were traded at $63.30 a barrel. US WTI futures were traded at the same rate of $56.22. Amidst the speculations on the potential disruption in supply, IEA has vowed to take immediate action so as to keep global oil markets sufficiently supplied.
A report informing a drop in the US commercial crude inventories provided a firm support to the US oil prices on Wednesday. The prices held the ground after dropping by more than 6% on the previous day. At the same time, a warning issued by IEA regarding the uncertain market conditions kept the investors on edge. WTI increased and was at $53.57 per barrel. Brent hasn’t started the trade yet.
On Tuesday, the International Energy Agency (IEA) informed that by 2030, natural gas might become the second largest energy source overtaking coal. The reasons behind this huge change would be an urge to bring down the air pollution and rise in the use of LNG. The organization also mentioned in its World Energy Outlook 2018 that the energy demand will jump more than a quarter between 2017 and 2040.
The head of the International Energy Agency has said that at next meeting OPEC must decide to increase its production. The Executive Director of IEA said, “If the oil producers care about the health of the growth of the global economy, they should take the steps to further comfort the market.” He has also informed that without the support from OPEC, the global economy will enter into a dangerous stage.
The International Energy Agency yesterday released its monthly report and said that the oil markets appear to be “adequately supplied for now” after a boost in production in recent months. It also noted, however, that the oil industry is coming under stress as it deals with the swelling global demand.The energy watchdog said that the world’s spare oil production capacity is already down to only 2% of global demand.
Following the slump in rates yesterday, oil prices edged up today, gaining some ground. While Brent crude was traded at$74.80 a barrel, WTI, on the other hand, was priced at $70.88 a barrel. Thursday brought optimism in the oil market as the IEA stated about a large number of output disruptions keeping the pressure on global oil supply and prices.
For the longest time in the past, oil was seen as the bedrock of the Saudi-US relationship. A stable and balanced supply of oil from the largest exporter of the Middle East was considered critical for the US economy. However, the equation is undergoing a transformation with shale bloom from Texas to North Dakota. According to IEA, this will have profound implications on energy geopolitics.
Oil output plummeted in the UAE; it dropped 70, 000 bpd from January, a subject matter expert observed. The cut is the biggest since UAE reduced production in alignment with the OPEC’s decision to restrict production in order to control the global glut. UAE’s average compliance with its cuts which improved to 117% in January from 103% in December, according to IEA.