Brent Crude Hits $80

Brent Crude Hits $80

Saudi gets its wish for $80 of Brent crude.

The 30 percent recovery in crude prices since February has given strong tailwind to oil companies such as BP, whose profits recovered last year after a three-year slump in the market.

Brent crude futures (LCOc1) gained 85 cents to settle at $79.28 a barrel, while USA crude futures gained 18 cents to settle at $71.49 a barrel.

The U.S. dollar hit its highest level in four months against the yen JPY= as yields on benchmark U.S. government bonds hit a seven-year high. Thus, this Thursday has reached 72.30 dollars per barrel, its maximum amount since November 2017. Thus, fear of investors to reduce supply drives amount upward. Yesterday, crude oil prices ended the day flat.

The 6-month business conditions index fell to 38.7 from 40.7, but the employment index improved to 42.8 from 34.6, with new orders rising to 40.3 from 37.2, while prices paid slid to 63.4 from 66.8 and prices received dropped to 33.6 from 47.9. For its part, Diesel has marked a new annual maximum and levels that were not seen since December 2014 to be in 1.207 euros, a rise of 1.42%, according to data from European Union oil bulletin.

"Oil prices are finally on a clear upward trend, while strong global growth is boosting demand for regional goods", Spain-based research firm FocusEconomics said in its May Consensus Forecast report for the Middle East & North Africa (MENA). Since March - when annual lows were recorded and rise began - price of diesel has risen by 7% and gasoline 6.7%.

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Brent prices have climbed nearly 20% in 2018, boosted by output cuts from major producers and increased tensions in the Middle East. "At the same time China has also taken up the opportunity to further enhance its relationship with this major oil producer, extending valuable discussions with Iran's Foreign minister as it looks to find ways around the re-establishment of United States sanctions".

Crude has been trading at their highest levels since November 2014 due to a combination of output cuts by OPEC and other major producers, except the USA; strong demand amid the global growth recovery; as well as the heightened geopolitical tensions in the Middle East.

Late last week, US National Security Advisor John Bolton made it clear that Washington may slap sanctions on European Union companies cooperating with Tehran after the US administration's withdrawal from the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA).

"So I wouldn't be surprised to see $100 per barrel in the coming months".

Looking at United States crude oil stocks, the most recent EIA figures (May 16) showed falling crude oil stocks and falling gasoline inventories.

Beyond OPEC's cuts, strong demand, falling output from Venezuela and a USA announcement this month that it would renew sanctions against OPEC member Iran have helped push up Brent by 20 percent since the start of the year.

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