Home BUSINESS Oil prices rises to $70 on strong economy following OPEC cuts

Oil prices rises to $70 on strong economy following OPEC cuts

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Oil prices remained firm on Wednesday, after receiving ongoing support from healthy economy growth and restricted supplies led by a group of producers around the Organization of Petroleum Exporting Countries (OPEC) and Russia.

Spot Brent crude oil futures, the international benchmark for oil prices, were at $70 per barrel at 0102 GMT, up 4 cents from their last close.

The U.S. West Texas Intermediate (WTI) crude futures were at $64.59 per barrel, up 12 cents .

A survey carried out on Wednesday, showed that in the recent sign of healthy global economic growth, Japanese manufacturing increased at the fastest pace in January, for the first time in four years.

The latest economic growth has led to healthy oil demand growth, which comes at time that OPEC and Russia lead production cuts aimed at tightening the market and inflating prices.

The deal to withhold output started in January last year and is currently set to last through 2018.

Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore said a “beaming economic forecast along with stout compliance from OPEC (to withhold production) is providing convincing support.”

In spite of the overall supportive market conditions, which have seen crude futures rally by almost 15 percent since early December, there are signs that traders are preparing for a downward correction.

One way of doing that is to take out so-called put options on crude futures contracts which give a trader the right, but not the obligation, to sell at a certain price.