The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy

Oil prices over $70 are becoming sustainable with the ongoing, gradual decline in global oil inventories and with the fall of the U.S dollar index, all of which have impacted the rise in oil prices since the second half of 2017. Geopolitical issues have also affected the push in oil prices albeit on a temporary basis.

Nonetheless, U.S. oil production is slowly increasing with further rises set to support a greater price boost.

Last week’s oil markets will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) oil inventories, weekly EIA crude oil production in the U.S. and weekly U.S. Baker Hughes rig count.

Brent oil started the week with a rise to $68.65 through the decline in the U.S. dollar index.

It surged to $71.04 support by the recuperation in the financial markets and with a weaker U.S. dollar.

It continued its ascent to $72.06 with the rise in geopolitical tension between Russia and the U.S over Syria.

Although it slid down to $72.02 due to increases in the U.S. dollar index and profit taking in the oil market, it climbed and settled at $72.58 as tension peaked with between Russia and the U.S. over developments in Syria.

OPEC led by Saudi Arabia and non-OPEC participating countries led by Russia are well on their way to reaching their oil cut target set at the end of 2016 to remove the surplus in global oil inventories. The latest data shows that the surplus over the five-year average in oil stocks of industrialized countries has almost been removed.

According to the IEA Monthly Oil Market Report in April, the surplus over the five-year average in OECD commercial oil stockpiles for February was 30 million barrels compared to 53.6 million barrels over the five-year average in January. Furthermore, OPEC’s Monthly Oil Report for March noted that the surplus over the latest five-year average in OECD commercial oil stocks was 43 million barrels in February compared to 50 million barrels over the five-year average in January 2018.

According to the latest EIA Short-Term Energy Outlook on April 10, U.S. crude oil production forecast for 2018 is 10.7 million barrels per day on average - unchanged from last month’s report. However, the forecast for 2019 has been revised up to about 11.4 million barrels per day – or 0.1 million barrels per day more than the previous month’s report.

This week although profit taking in the oil market is likely because of increases in U.S. oil production after last week’s price rally, the price of Brent could endure over $70.

- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.