United States crude ended Monday's session down Dollars 1.09, or 2.1%, at USD 50.58. The dollar strengthened, also weighing on commodity prices.
We are steadfast in our prediction that the global oil market is rebalancing. Analysts responding to commodity group S&P Global Platts said they expected to see a draw on US crude oil inventories of around 1.5 million barrels, while USA gasoline inventories climb 1.5 million barrels.
OPEC and its partners, including Russian Federation, need to extend their oil-production cuts for at least three more months to keep crude prices at current levels, according to UBS Group AG.
Hedge funds boosted wagers on rising Brent crude to a record and were the most bullish they’ve been on the USA oil benchmark in five weeks on signs that global demand is improving. Brent finished the third quarter up 20% for its largest quarterly gain in 13 years on bets that production cuts by OPEC were finally bringing an end to a three-year long glut in world crude supplies.
Hamm says the EIA prediction of more than 1 million new barrels a day in US production, is wrong and is distorting global oil prices.
Total product demand over the last month period averaged over 20.2 million barrels per day, up by 1.9% from the same period a year ago. Meanwhile U.S. drilling has gathered pace, indicating the price rebound is encouraging supply. Over the last month, gasoline demand averaged about 9.5 million barrels per day, up by 1.3% from the same period previous year.
The recent data has been the most bullish news for crude oil this year. Imports were lower which led to the decline in stocks, and demand remains robust as exports of distillates continue to rise on a year over year basis.
Anything above $60 a barrel is going to be a massive incentive for USA shale to ramp up production, said Chris Bake, a senior executive at Vitol. However, output is still expected to climb, even if gradually, to a 48-year record in 2018.
Further, Novak noted that the OPEC and non-OPEC countries agreed to monitor not only oil production, but also its exports. If not extended, an extra 2 percent of global crude oil could flood the market.
On the daily chart, we see that although crude oil moved a bit higher on Friday, the size of rebound was small compared to Thursday pullback.
With oil above $60, there is a reduced need to “cheat” among producers, but it’s lucrative to do it.
Gasoline versus oil supply is one reason the petroleum markets are struggling.