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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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Why Oil Prices Just Rallied To $70

The price of a Brent barrel surpassed the $70 mark in morning trading on Tuesday, after a rather rocky start to the week. But is $70 Brent here to stay?

Both the WTI and the Brent benchmarks were trading up on Tuesday by almost 3 percent, with Brent reaching the psychologically important $70 threshold shortly after 9:00am EST. This was a dramatic one-day increase over Monday morning’s level of about $67.00 per barrel. The WTI barrel followed a similar upward trajectory.

In today’s volatile oil market, it can be tough to assign any single catalyst to oil price movements; often its many catalysts, other times it’s an undefinable one. While it may be tough to finger one specific catalyst, the weaker dollar, followed by geopolitical unrest over Venezuela, Iran, Russia, Syria, N Korea, and of course China, are likely culminating in somewhat of a perfect storm, helping to lift oil prices.

One of the immediate factors helping to lift Brent above $70 was Trump’s Monday promise to respond “forcefully” to the suspected chemical attack in Syria. Russia responded in kind with threats of repercussions should the United States follow through with military action. Then Chinese President Xi Jinping showed signs of relenting in the trade spat with the United States, promising to open up China’s economy, including lowering tariffs on cars and enforcing intellectual property of foreign firms—something that the Trump administration has been eyeing for some time.

Also on Tuesday the United States gave the EU a May 12 deadline to redo its agreement with Iran that saw an end to sanctions over its nuclear program.

Further price swings are in store for later this afternoon, as the American Petroleum Industry releases its most recent figures that quantify US crude oil, gasoline, and distillate inventory at 4:30pm EST.

By Julianne Geiger for Oilprice.com

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Leave a comment
  • Ann on April 10 2018 said:
    there is no reason for this increase. it amounts to a bunch of cons manipulating prices. there is plenty of oil and as you will see there will be a rapid freefall when the speculators begin taking the profits
  • Louisette Lanteigne on April 10 2018 said:
    The pattern I noticed for a long time is that prices go up just prior to a major divestment or with Kinder Morgan phasing away it might be a way to get more cash to help protect the soverignty funds, insurance and pensions who got wrapped up in this mess. Recovering costs basically. It takes 8 to 12 years to stop projects on average. It would be unusual to see an earlier folding of a venture this scale.
  • Mark Comerford on April 11 2018 said:
    Despite the consistent overage in oil availability, the "remarkable" lack of competition at the street level, and the fact that shipping costs(the Middle East, Venezuela, Russia, etc) are no longer a major concern; prices not only refuse to fall, but have risen.
    One has to assume that the reason is artificial, and that both the government and the industry are linked in this scenario. The natural flow of a competitive economy has been corrupted for some time as the "influence" (aka money) that has flowed into the open arms of Congress has formed, particularly since the latest crash, small, but powerful, groups of state supported sectors where quantity has nothing to do with pricing.
    in other words, markets in some areas no longer compete for the consumer because the prices are fixed by collusion of "Industry Councils".
  • Tim Turley on April 11 2018 said:
    The real story here is demand and storage... world demand increased again last year 1.5mbd-y/y, and the current inventory decreased to just 50m barrels above the 5 yr average... slowly, the market has reached equilibrium, and is now being pushed up by geopolitical events, shale production bottlenecks, and the Saudi-led OPEC production constraints. We'll see $70+ this year, and $80+ next year when lower exploration since 2015 creates spot shortages.

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