- Oil prices recorded their strongest start to a calendar year since 2014 on Tuesday
- It was the first time in four years that both crude oil benchmarks had opened the year above $60 a barrel
- “Shale is not going to be such a bottomless production pit this year,” Giles Keating, managing director at the Werthstein Institute, told CNBC on Tuesday
U.S. West Texas Intermediate (WTI) crude futures traded at $60.45 a barrel, up 0.05 percent, at around 9.40 a.m. London time. The benchmark peaked at $60.74 a barrel earlier in the trading day, recording its highest level since June 2015.
Brent crude futures traded at $66.81 a barrel on Tuesday morning, down 0.1 percent, after hitting a May 2015 high of $67.29 a barrel earlier in the session.
It was the first time since January 2014 that both crude oil benchmarks had opened the year above $60 a barrel.
‘Supportive’ market conditions
Iranian protesters attacked police stations late into the night Monday, news agency and social media reports reported, as security forces struggled to contain the boldest challenge to the clerical leadership since unrest in 2009.
However, even without the ongoing unrest in Iran — which is a major oil exporter — market sentiment was already relatively upbeat.
William Dinning, head of investment strategy at Waverton Investment Management, told CNBC on Tuesday that the energy markets’ outlook was “broadly very supportive.”
“There doesn’t seem to be any great political risk premium in the oil price at the moment and again we think that might be supportive,” he added.
Goldman Sachs and Morgan Stanley both raised their respective oil price forecasts in the latter months of 2017, citing a stronger-than-anticipated OPEC-led commitment to extend production cuts. The cuts, which started in January 2017, are poised to continue through all of 2018 as the allied oil producers seek to clear a global supply overhang.
Meanwhile, U.S. commercial crude inventories have slipped nearly 20 percent from the highs recorded in March last year.
US shale not going to be a ‘bottomless production pit’
“Shale is not going to be such a bottomless production pit this year,” Giles Keating, managing director at the Werthstein Institute, told CNBC on Tuesday.
Keating said that if forecasters predicting further interest rate rises were found to be correct over the next 12 months then this would “really matter” for U.S. shale supply.
The price of oil collapsed from almost $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC’s reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil producing nations — in late 2016.
— Reuters contributed to this report.