Oil near 2015 highs on strong China data

February WTI crude oil futures (DWT)(SCO) contracts rose 0.8% to $60.3 per barrel at 12:45 AM EST on December 29, 2017-the highest level since June 2015.

Data released today from EIA for October largely confirms earlier predictions by Rystad Energy that USA oil production could reach 10 MMbpd at the end of 2017.

"The key driver for the oil market this year has been that the OPEC and Russian production cuts were introduced, complied with and extended", said Ric Spooner, a Sydney-based analyst at CMC Markets.

US bank Goldman Sachs also warned of greater price volatility ahead, citing rising tensions in the Middle East, especially between OPEC members Saudi Arabia and Iran, along with soaring USA oil production. Following the huge additions now confirmed for October, we expect EIA could raise December data by up to 300,000 bpd.

China, in particular, has increased its intake of USA oil this year.

"Market participants expect OPEC to extend the production cuts beyond March 2018 and stocks to decline further", analysts at Commerzbank said, noting, however, that "the higher price level should lead to a further rise in US shale oil production".

WTI has recovered to more than $60 a barrel of late. State oil major China Petroleum & Chemical, or Sinopec, is reportedly considering joining plans for a pipeline connecting the Permian Basin in Texas, America's biggest source of shale oil, to the export hub of the Gulf of Mexico.

Some analysts think Friday's crude gains will evaporate sooner than later: "The current highs are unsustainable in the short-to-medium term, with prices likely to head back below $60 once we get past January", stated JBC Energy GmbH.

In the North Sea, the 450,000 bpd capacity Forties pipeline system was shut this month after a crack was found. America's growing presence as an oil exporter could even become a source of tension with Middle Eastern countries and Russian Federation.

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