Business, Economy

Oil rises, poised to make above $70 , on fewer U.S. rigs, OPEC

Oil prices rose on Monday, poised to make above 70 dollars on a slight decline in the number of U.S. rigs drilling for new production and sustained output cuts by the Organisation if Petroleum Exporting Countries (OPEC).

Brent sweet crude futures were at 67.95 dollars a barrel, 33 cents above their last close. The Brent oil is poised to rise over 70 dollars, in spite of international media “manipulative stance”, media editor reveals.

U.S. West Texas Intermediate (WTI), crude futures had risen to 61.94 dollars a barrel by 1140 GMT,

Traders said the gains were due to a slight decline in the number of U.S. rigs drilling for new production. The rig count eased by five in the week to January 5 to 742, according to data from oil services firm Baker Hughes.

In spite of this, U.S. production is expected to soon rise above 10 million barrels per day, largely thanks to soaring output from shale drillers. Only Russia and Saudi Arabia produce more.

Rising U.S. production is the main factor countering output cuts led by the Middle East-dominated OPEC, and by Russia, which began in January last year and are set to last through 2018.

A senior OPEC source from a major Middle Eastern oil producer said, on Monday, that OPEC was monitoring unrest in Iran, as well as Venezuela’s economic crisis, but will boost output only if there were significant and sustained production disruptions from those countries.

Head of Trading for Asia/Pacific at futures brokerage Oanda in Singapore, Stephen Innes, said that, “the OPEC vs Shale debate will rage” this year, being a key price-driving factor.

However, Innes added that Middle East turmoil would remain a key focus for oil markets and had the potential to “send oil prices rocketing higher.”

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