Oil prices have hit a three-year high, reaching almost US$70 a barrel, signaling a strengthening outlook for the sector in 2018.
US West Texas Intermediate, WTI, crude futures were at $63.40 a barrel Up by 44 cents, or 0.7 per cent, above their last settlement.
Rising geopolitical fears coupled with the ongoing OPEC output cap, means the price of Brent crude oil is moving closer to the $70 per barrel level. Novak said the current oil price was short-term, and he would discuss the situation at a ministerial monitoring committee meeting in Oman, scheduled for January 21.
While I am expecting crude to retrace some of its gains, I think there is a risk that the average price this year will be ahead of consensus forecasts. There are concerns that the administration of U.S. President Donald Trump will escalate tensions with Iran and reimpose sanctions that could cut off crude oil flows.
Lower domestic crude oil prices made USA crude oil more competitive in worldwide markets and supported record US crude oil exports.
The cuts, which have mostly targeted Europe and North America, was aimed at reducing a global supply overhang that had dogged oil markets since 2014.
Oil prices have risen above Dollars 70 per barrel for the first time since 2014 as investors bet supply cuts led by OPEC will dominate the market this year.
Brent crude futures rose 61 cents to settle at $69.87 a barrel.
USA crude stockpiles at Cushing, Oklahoma, the delivery point for WTI, and the nation's biggest oil-storage hub, probably fell by 1.5 million barrels last week, according to a forecast.
The Brent-WTI price spread averaged more than $3.33/b in 2017.
Crude oil production from the Organization of the Petroleum Exporting Countries (OPEC) averaged 32.5 million b/d in 2017, a decrease of 0.2 million b/d from 2016.
As shale oil development trends are rather uncertain, it is possible that the upward trend in crude oil prices will continue.
The initial announcement from a number of OPEC participants of a possible extension during the second half of 2017 has also sparked a positive market outlook regarding the recovery of oil prices as well as various reports of growing demand for crude in a number of countries. Its gasoline exports are up by 365 per cent since early 2015, to more than 1 million tonnes in December.
Analysts are looking for an increase in gasoline stocks of 2.3 million barrels, which would fall well below the 6.05 million-barrel build seen for the same period from 2013-17.