NYMEX crude trades above $60 per barrel Friday and has tested the highest level since mid-2015. The sharp rally seen in crude oil since September will help WTI crude end the year 2017 with a robust 11% gain.
Brent has outperformed WTI in 2017 due to tightness in global market caused by OPEC’s production cut. Brent is set to end the year with a near 17% gain.
Crude oil rose in 2017 as OPEC reduced output to help rebalance global market. Crude also benefitted from decline in US crude oil stocks and sharp gains in US equity market. However, the major negative factor was record high US crude production.
The year 2018 will be challenging year for crude oil as OPEC’s production cut will be countered by rising US crude production. Demand outlook remains robust but higher price could challenge demand growth.