The oil price remained above $60 per barrel Tuesday, after breaching the key level Friday last week. How long it will remain above the important threshold, however, remains under discussion.
The price of Brent crude oil was $60.592 in the early afternoon UK trading session. While that’s marginally down from the UK open, it’s only a little lower than the highs hit Monday when Brent crude was trading above $60.80 per barrel.
The US Western Texas Intermediate oil price, meanwhile, was $54.13 per barrel.
OPEC supply cap seen extended
The price of oil was supported last week by a combination of reports implying OPEC and non-OPEC members are keen on extending the current output cap.
Comments from Russian President Vladimir Putin and Saudi Crown Prince Mohammed ban Salman, suggesting they would be keen to see the current output cap remain in place throughout 2018, gave investors’ confidence it will likely be so.
The outcome of the next OPEC meeting in November, will be closely monitored.
In addition, to those comments, the level of supply of oil from Iraq was also under pressure as forces continued to fight around the strategically important city of Kirkuk, which affected production and supply.
An increase in production from southern Iraq oil fields this week, meanwhile, has weighed a little on the price of oil.
Another key factor supporting the higher price of oil is with regards to US shale oil production. Some analysts say the current level of US shale oil supply, might not be maintained in 2018.
If the supply of oil from all producers is lower, it will drive the price of the valuable commodity higher.
Meanwhile, the International Monetary Fund said last week in its commodity markets outlook, it expects the price of oil to average $55 per barrel in 2018. That’s up from its forecast for $53 per barrel in 2016.