No change overnight. Longer TFs still technically in negative/neutral territory. short term neutral. Today we see publication of OPEC monthly report, which generally contains a lot of interesting articles but not likely to contain anything sensational from a short term trading perspective - especially ahead of tomorrow’s weekly inventories release which is the current focus point.
In the meantime, the IEA (International Energy Agency) released yesterday its latest annual 5-year oil-market forecast: Market Report Series: Oil 2017
Whilst trading focus at present seems to be almost entirely on the supply side, i.e…:
[I]- Will the OPEC (and eleven non-OPEC producers) agreement to substantially cut production levels last November succeed in supporting oil prices? (It has achieved about 98% compliance so far from members and even the non-compliant, UEA and Iraq, have agreed to catch up, via drill well maintenance shut-downs etc, before the reduction period ends in June.)
Will the OPEC-led agreement be extended beyond the current arrangement in May? (These cuts, combined with low price levels have already caused severe economic problems in many countries causing savings programmes, cut-backs and cancellations in projects. These countries will not easily be persuaded to extend production cuts if they do not seem to be working successfully.)
How far and how quickly will the US shale oil production be increased? (Reserves are huge and the technological costs of upstream development have reduced considerably especially with horizontal drilling and fracking processes. Also US ambitions to reduce import dependency[/I])
…The IEA report reminds us that there is also a demand side and that demand is expected to increase consistently and strongly throughout this 5-year period. Here are some demand-side highlights of the report:
[I]Our outlook for demand in this report is little changed from the one we published a year ago: global oil demand is expected to grow on average by 1.2 mb/d each year to 2022.
This net global figure contains OECD demand falling by an average 0.2 mb/d per year due to long term trends in fuel efficiency standards and changing demographics. In the non-OECD countries, there is still plenty of growth potential and we expect an upside of 1.4 mb/d each year to 2022.
India is gradually becoming the focus of attention as Chinese demand growth slows. Twenty years of strong demand growth in China, fuelled by rapid industrialisation and infrastructure spending, is giving way to a slower pace as the Chinese economy moves towards a services and consumer-led structure. Indian per capita oil consumption is just 1.2 barrels per year today, and the number is expected to reach 1.5 barrels per year by 2022.
That is also probably true for transportation fuels in many other developing economies, as more families move up the income scale and buy their first car. In our forecast period, this will almost certainly be gasoline-fuelled. While the much-discussed growth in the electric vehicles fleet is a very important longer term issue for oil demand, by 2022 we estimate that only limited volumes of global transport fuel demand will be lost to EVs from conventional fuels.
Regarding tighter vehicle efficiency standards now being applied to trucks for transport fuel demand. Even though big savings will be achieved over time, within the five-year outlook it is a question of merely slowing the rate of growth, rather than seeing a major change to the pattern of demand.
The Middle East producers, traditionally amongst the leading suppliers to growing Asian markets, cannot alone meet the growth in Asia’s crude import requirement which will rise from 21 mb/d in 2016 to 25 mb/d in 2022 due to growth in demand and the decline in regional production.
More investment is needed in oil production capacity to avoid the risk of a sharp increase in oil prices towards the end of our outlook period. The oil market today seems remarkably sanguine about this issue, but this feeling might not persist for too long before the realisation dawns that unwelcome price pressures might lie ahead[/I]
Full report here: http://www.iea.org/Textbase/npsum/oil2017MRSsum.pdf