Oil Prices Hover Near 17-Month High

Brent crude rose over 2 percent earlier on Tuesday, and is now trading up 1.81 percent at $57.85 per barrel.

In the near term, that means oil prices are as important as ever.

News from Libya has hit the wires in late December that the country's major oil field could come back online after staying off for past two years. As US oil production surged, Saudi Arabia and other major oil producers boosted their own production to record highs in order to maintain market share, which caused the oil price to tumble.

Wood Mackenzie suggests that $55 per barrel is a sweet spot for the oil and gas industry to rebound, a level that is only slightly above today's prices.

Brent futures were up 46 cents, or 0.8 per cent, at $58.37 a barrel by 11:07 am EST (1607 GMT).

With Donald Trump poised to take the United States presidential office, some market commentators reckon his erratic outbursts on Twitter and protectionist attitude might push safe-haven seekers to gold.

"We're operating under a cloud of uncertainty at the moment", said Fed Chair Janet Yellen in the minutes.

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And she said, "that would be the ideal situation" if a replacement was passed at the same time that Obamacare was repealed.

The U.S. Energy Information Administration found that U.S. crude oil production rose 2.7 percent in October to about 8.8 million bpd but was still down by about 6 percent from year-ago levels.

In November, the Organization of the Petroleum Exporting Countries (OPEC) members agreed to the output cut. The OPEC's decision to cut oil supply has led oil prices to rise to over $50 a barrel.

But, if any countries begin to break from the deal, oil prices could tumble.

"Too much faith has been put in OPEC and the other countries that have promised cuts", John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, said by telephone.

After being insulated from an increase in the domestic fuel prices, the ongoing upsurge in global crude oil prices could spoil the party for Indian consumers of petrol and diesel. The OPEC nations have already started to see pressure coming off of them thanks to the pick-up in prices. Oil production in December was 347.4 million barrels, up 3.5 percent from December 2015. Prices are weakening slightly this morning, but trading is light before the holiday weekend, and it looks like WTI will end the week close to $54/b.

While reports of the OPEC deal holding strong into the new year boosted prices, increased production from USA oil and gas companies as well as a stronger dollar could create headwinds for oil prices.


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