Oil prices at their highest since 2014 amid warnings of overheated market

Oil prices hit their highest levels since 2014 on Wednesday due to ongoing production cuts led by Opec as well as healthy demand, although analysts cautioned that markets may be overheating.

A broad global market rally, including stocks, has also been fuelling investment into crude oil futures.

US West Texas Intermediate (WTI) crude futures were at US$63.47 a barrel at 0405 GMT - 51 cents, or 0.81 per cent, above their last settlement. They marked a December-2014 high of $63.53 a barrel in early trading.

Brent crude futures were at $69.19 a barrel, 37 cents, or 0.54 per cent, above their last close. Brent touched $69.29 in late Tuesday trading, its strongest since an intra-day spike in May 2015 and, before that, in December 2014.

"The extension of the Opec agreement ... and declining inventories are all helping to drive the price higher," said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

In an effort to prop up prices, Opec together with Russia and a group of other major producers last November extended an output cut deal that was due to expire in March this year to cover all of 2018.

________________

S&P raises 2018 Brent oil price forecast on ongoing cuts and strong demand

China focus on clean energy may sink oil prices in 2018, Saxo Bank predicts

________________

The cuts, which have mostly targeted Europe and North America, were aimed at reducing a global supply overhang that had dogged oil markets since 2014.

The American Petroleum Institute said late on Tuesday that crude inventories fell by 11.2 million barrels in the week to January 5, to 416.6 million barrels.

Official US Energy Information Administration data is due at late on Wednesday.

Amid the general bull-run, which has pushed up crude prices by more than 13 per cent since early December, there are indicators of an overheated market.

In the US, crude oil production is expected to break through 10 million barrels per day (bpd) this month, reaching levels only Russia and Saudi Arabia have achieved.

In Asia, the world's biggest oil consuming region, refiners are suffering from high prices and ample fuel supplies.

"One area of concern, particularly in Asia, is that of [low] refining margins ... This drop in margins could reduce Asian refiners' demand for incremental crude in the near term and weigh on global prices," said Sukrit Vijayakar, director of energy consultancy Trifecta.

Average Singapore refinery margins this week fell below $6 per barrel, their lowest seasonal value in five years, due to high fuel availability but also because the recent rise in feedstock crude prices dented profits.

Asian oil prices are higher than in the rest of the world.

While Brent and WTI are still below $70 per barrel, the average price for Asian crude oil grades has already risen above that level, to $70.62 per barrel, according to Thomson Reuters data.

While you're here

Mina Al-Oraibi and Mustafa Alrawi: Abraham Accord 'big turn for optimism'

Colin Randall: Why Macron's Lebanon visit has garnered mixed reviews

Sulaiman Hakemy: The fall of Britain's aid agency creates a more selfish world

How The Debt Panel's advice helped readers in 2019

December 11: 'My husband died, so what happens to the Dh240,000 he owes in the UAE?'

JL, a housewife from India, wrote to us about her husband, who died earlier this month. He left behind an outstanding loan of Dh240,000 and she was hoping to pay it off with an insurance policy he had taken out. She also wanted to recover some of her husband’s end-of-service liabilities to help support her and her son.

“I have no words to thank you for helping me out,” she wrote to The Debt Panel after receiving the panellists' comments. “The advice has given me an idea of the present status of the loan and how to take it up further. I will draft a letter and send it to the email ID on the bank’s website along with the death certificate. I hope and pray to find a way out of this.”

November 26: ‘I owe Dh100,000 because my employer has not paid me for a year’

SL, a financial services employee from India, left the UAE in June after quitting his job because his employer had not paid him since November 2018. He owes Dh103,800 on four debts and was told by the panellists he may be able to use the insolvency law to solve his issue.

SL thanked the panellists for their efforts. "Indeed, I have some clarity on the consequence of the case and the next steps to take regarding my situation," he says. "Hopefully, I will be able to provide a positive testimony soon."

October 15: 'I lost my job and left the UAE owing Dh71,000. Can I return?'

MS, an energy sector employee from South Africa, left the UAE in August after losing his Dh12,000 job. He was struggling to meet the repayments while securing a new position in the UAE and feared he would be detained if he returned. He has now secured a new job and will return to the Emirates this month.

“The insolvency law is indeed a relief to hear,” he says. "I will not apply for insolvency at this stage. I have been able to pay something towards my loan and credit card. As it stands, I only have a one-month deficit, which I will be able to recover by the end of December."

Benefits of first-time home buyers' scheme

Priority access to new homes from participating developers
Discounts on sales price of off-plan units
Flexible payment plans from developers
Mortgages with better interest rates, faster approval times and reduced fees
DLD registration fee can be paid through banks or credit cards at zero interest rates