Baku. 11 June. REPORT.AZ/ A few days is a long time in crude oil markets these days. On Friday, crude oil weakened following Opec's decision to maintain current production targets. Since then WTI crude oil has rallied by eight percent as the focus quickly has reverted back to price supportive developments in the US. It was said by the Head of Commodity Strategy of Saxo Bank Ole Hansen.
Report informs, according to information about a continued fall in shale oil production from the EIA and expectations that US inventories has fallen for a sixth consecutive week have both helped trigger a change in focus from an oversupplying Opec to falling production in the US.
In its latest "Drilling Productivity Report" the US Energy Information Administration (EIA) said it expected production from the major US shale oil regions to fall by 92,000 barrels in July – the lowest since January. For the first time they also forecast an actual drop in production for 2016, which would be the first in eight years. This, combined with a dollar that has struggled to resume its strength and the outlook for another drop in weekly inventories, has helped drive both Brent and WTI crude oil back towards the higher end of the ranges which have prevailed since April.
Meanwhile, further price-supportive news came earlier today in the form of Opec's monthly market report which forecast unchanged global demand at 1.18m b/d and noted that "oversupply is likely to ease in coming quarters" because of a pick-up in demand and slower non-Opec supply growth.
Surveys have put the reduction at between 1.5 and 1.8 million barrels and this should leave the overall inventory level around 476 million barrels, which is still some 100 million barrels above the five-year average.
For now the technical picture remain bullish and fundamentals such as the risk of increased - not lower - US production should the price move higher from here is not something that short-term traders would be that concerned about.