OPEC may get the credit for the longest winter decline in U.S. crude stockpiles in a decade, but other factors are also at play, including strong refining margins, frigid weather and robust foreign demand. The bottom line: A 49% surge in benchmark North American crude futures since late June, putting prices at a three-year high.
Bloomberg reported that an array of international events in the Middle East and elsewhere contributed to the price rise as the year rolled to an end, helping form a “perfect confluence of events” supporting 2017 demand. Will it last? Analysts are divided. Some see prices rising to $80 a barrel, citing ongoing geopolitical risks. Others, predicting rising growth from America’s fertile shale fields, aren’t so sure.
“We expect inventories are going to build this year — slightly,” said Michael Cohen, Barclays Head of Oil Markets Research, in an interview on Bloomberg TV. “You’re going to see a bunch of new crude supply coming on to the market this year from the U.S. So all in all, on a balanced basis, we don’t see the kind of shortage to bring us to $80 for a sustainable basis.”
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