Oil prices finally gain some ground after last week’s steep drop
Oil prices are back on the rise today after a steep sell-off last week took the black stuff to its lowest level of the year.
Crude prices were boosted by a weaker US dollar and a rebound in global stock markets following the turmoil seen last week, but rising US production is still keeping a lid on the rally.
At the time of writing, Brent crude, the global benchmark, was up 1.72 per cent at $63.87 a barrel. Last month it climbed above $70 a barrel for the first time since 2014.
West Texas Intermediate (WTI), the US benchmark, was up 1.91 per cent at $60.33 a barrel.
The rise came as the Organisation of the Petroleum Exporting Countries (Opec), said a healthy world economy would boost world oil demand more than expected this year, but higher output in the US would only allow the global market to return to balance at the end of the year.
In its monthly report, Opec revised production growth from outside the cartel higher, saying countries like the US would grow supplies by 1.4m barrels per day (bpd) this year, up 250,000 bpd from its previous forecast, as higher prices encourage more production.
World oil demand is expected to rise by 1.59m bpd this year, up 60,000 bpd from Opec's previous forecast.
Goldman Sachs also struck a cautionary tone over the recent rally in oil prices today.
The bank said factors which pushed oil prices higher, including increased global demand, supply disruptions and US producer discipline, were less likely to be sustainable.
“Most importantly, investors remain unconvinced US producer discipline will hold,” Goldman Sachs said in a note.