The oil price is once again heading for the $60 mark in today’s trading session after yesterday’s attempt which add to a rally of around 8 percent over the last 2 weeks and some predict that there are further gains in store.
A explosion in one of Libya’s biggest oil pipelines on Tuesday which is under the control of the Waha Oil Company terminal has currently reduced oil supplies to the market by 70,000 to 100,000 barrels a day and will not be repaired until after the New Year.
“The net global impact of the (Libyan) pipeline explosion is relatively small and we will not blow out of proportion the impact of the incident on the supply and demand picture,” said Olivier Jakob from Swiss-based Petromatrix.
This is likely to be the catalyst for further support of the oil price but some analysts believe that the rise in oil price towards the end of the year has become a familiar site in recent times and the price only ends up reversing as the New Year gets under way.
“This could now be the fourth year in a row when the period around the turn of the year offers a good opportunity to start fading the market,” noted analysts from JBC Energy.
“We would have to argue that sometime over the course of January we will see a major turnaround.” they added.
Another factor which may hit the oil price in the coming years are the U.S. drillers who are planning to ramp up production of oil to take advantage of the higher prices which was evident this year from West Texas’s Permian Basin which produced a record 815 million barrels of oil in 2017.
"The magnitude of the rebound in Permian Basin liquids production is unprecedented," noted analyst Reed Olmstead.
"Not so long ago, many in the industry were saying the Permian was dead. “he added.