Oil surged on OPEC jawboning and supply disruption from Canada
- Oil surged on OPEC jawboning about production cut extension beyond 2018.
- Oil was also boosted by supply disruptions from a key Canadian pipeline to the US.
Crude oil/WTI is now trading around 62.10, in New York session, up by almost 0.90% on OPEC jawboning and supply disruption from a key Canadian pipeline to the US.
On Tuesday, the joint OPEC and non-OPEC Technical Committee concluded that the oil glut is dissipating at a faster pace than anticipated. Additionally, UAE Oil Minister claimed OPEC and allies are to continue oil cooperation beyond 2018 and notes that the UAE, Saudi Arabia, and Russia all support an extension cut beyond 2018. UAE Oil Minister also said the UAE is expected to over-deliver on production cuts in Q1 due to maintenance commitment with the OPEC-led pact.
But UAE also said “OPEC led output cuts still have around 74 mln bbl overhangs to remove and 266 mln bbl so far removed from the 5 year average of oil inventories. Thus, job not yet done but output deal is working and OPEC currently not talking about an exit. OPEC sees significant investments coming back to shale oil industry and hope that will provide additional supply to meet demand growth. OPEC will have a meeting with shale oil producers during CERA week next month. Russia committed to OPEC-led supply cut deal until the end of 2018”.
Apart from OPEC+s boost, oil is also being supported by pipeline disruptions in Canada, which supplies crude to the US. But oil is also under some stress on Tuesday from a stronger USD.
On Monday, oil was supported by the report of better production cut compliances after OPEC and non-OPEC oil producers reported that compliance with production cuts rose to 133% in Jan.
Technically, Oil now has to sustain above 62.75 area for a further rally towards the 63.05 and 63.55-64.85 zone in the coming days; else it may again fall to the 61.00-58.00 area again.
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