Lukman Otunuga, analyst at futures brokerage FXTM, struck a similarly cautious tone, saying: "While the current momentum suggests that further upside is on the cards, it must be kept in mind that USA shale remains a threat to higher oil prices". Likewise, the oil for delivery in February was trading higher by Rs 33 or 0.84 per cent at Rs 3,939 per barrel in 216 lots.
Potentially undermining the trend towards tighter market conditions is U.S. oil production C-OUT-T-EIA, which has risen by nearly 16 percent since mid-2016, hitting 9.75 million barrels per day (bpd) at the end of a year ago.
Balancing the trend towards a tighter market is increased United States production, where the OPEC-led effort to drive up the price of oil is encouraging more shale oil output.
Even though the political unrest in Iran is putting some tension upward in the market, Iranian sources mention no impact neither on the oil production nor on the exports.
As well as this 800,000 bpd average increase in 2018, compared to 2017, the EIA expects global liquid fuels demand to rise by more than 1.6 million bpd this year, up from 1.4-million-bpd growth in 2017.
Crude prices also continue to be supported by the current agreement to reduce oil production, the main participants of which are the OPEC countries and Russian Federation.
Outside the OPEC-shale oil supply clash, the return of geopolitical risks to the oil market will be the major driver of potentially higher oil prices this year, analysts reckon. Oil output rose to 9.78 million barrels a day, increasing for the 10th time in 11 weeks.
Canada, Saudi Arabia, and Venezuela were the largest foreign suppliers of crude oil to the U.S.
Ole Hansen, head of commodity strategy at Saxo Bank, said: "The market has moved into a bullish corner and the question is whether there is any way out of that apart from having a correction".
OPEC members have a poor track record of sticking to agreed quotas, but they kept within 95% of the required cuts, with Saudi Arabia cutting further, meaning the aggregate production cut held.
USA oil prices have been on a steady rise in recent months and as expected ended 2018 strongly, above $60 a barrel. U.S. crude production continued to rise to reach 9.78mn barrels per day (mbpd) in the latest week (Reuters). This saw the price of a barrel drop dramatically from about $100 to a low $26.
What is sure is that the market is supported by many but temporary supply risks, that when resolved could bring back the prices to like $5-$10 lower.