Marcus Ashworth, Chief Market Strategist for Haitong Securities, was joined by Malcolm Graham-Wood, Oil Analyst and Malcy's Blog, to discuss the fundamental situation behind the current oil market, the supply and demand, as well as whether, when and how the oil price will turnaround.
Key Points:
The US are producing just over 9 million barrels per day, although some Shale production will be coming off and we can expect the production cuts coming though in the next year.
Saudi Arabia thought that the US would blink first, in fact the IOC's have blinked and have began cutting capex. Plus those with high costs are suffering like Venezuela and Nigeria.
China has a huge role to play and at some stage will be coming back to the market with their buying boots. China are building 100 airports, and 75% of all crude oil used in transportation.
1.5 million barrels a day extra are built in to the system every year, in a year or so demand and supply will be in tandem to a certain extent.
For the next 6 months the oil price will remain at the low end of the range, it will go up in advance of the fundamentals, but people will be buying Crude by the end of 2016.
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