Crude prices all as OPEC rises oil supply forecast
|Crude oil prices tumbled during the Asian session after OPEC revised its non-OPEC oil supply forecast for 2018 to the upside. The price of WTI fell by 1.40% to $62.85 a barrel before stabilising above the $63 threshold. The price of Brent followed a similar pattern as it slid to $68.30 before consolidating a few cents higher. In its monthly market report, the oil cartel expects non-OPEC supply growth to reach 1.15 million barrels per day – this is an upward revision of 160k barrels per day compared to previous estimates. This increase in forecast in mostly driven by higher growth expectations for the US and Canada.
On Thursday, the EIA reported that US inventories contracted by 6.9 million barrels from the previous week, while market participants were expecting a smaller decrease of 3.1 million barrels. US stockpiles have been shrinking continuously since April 2017, falling to 413 million barrels compared to 536 million. Yesterday’s surprise reduction was of little help in boosting oil prices, as speculators are already long crude oil (net long non-commercial positions topped 25% of total open interest, according to the CFTC).
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Against the backdrop of higher growth production and faltering demand, the oil outlook remains quite cloudy. The price of black gold has enjoyed a nice ride since last summer as OPEC members trimmed down production. Even though we are not ahead of a massive correction, we believe that the upside is quite limited.
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