As Oil Hits $70, Warning Lights Flash Up In Asia
With global oil consumption also strong amid healthy global economic growth, investor sentiment has been positive.
Ole Hansen, head of commodity strategy at Saxo Bank, said this week that "bullish news tends to get more attention than potentially bearish signals."
Yet, another of the bearish signals is rising U.S. oil production, which is threatening to derail OPEC's and Russia's efforts to tighten supplies.
Despite a recent drop due to extreme cold, U.S. crude oil output
"Oil prices have been undeniably bullish this week despite the lingering concerns over the current bull rally running out of steam . . . It must be kept in mind that rising production from U.S. shale has the ability to expose oil to downside risks," said Lukman Otunuga, Analyst at futures brokerage FXTM.
The U.S. Energy Information Administration (EIA) expects U.S. output to surpass 11 million bpd by 2019.
Soaring U.S. supplies mean U.S. WTI crude prices are over $5.5 per barrel cheaper than Brent
Taking advantage of their competitive prices, U.S. crude oil exports are rising, including to faraway Asia.
Feeling the pinch from mounting competition and the pressure from refiners, OPEC's No.2 and No.3 producers, Iran and Iraq, cut their crude oil prices this week to remain competitive with customers struggling from lower profits.
(Reporting by Henning Gloystein; Editing by Raju Gopalakrishnan)
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