MONDAY: Crude oil has slipped again when speculations arose again regarding Doha Meeting – a fortune teller; whether this *uncertainty within crude market would diminish or not.
(*imbalance between supply of, and demand for crude oil)
Brent crude futures were TRADING bearish with 20 cents at $41.75/barrel while U.S. WTI crude futures were cited 21 cents bearish from the previous session lower at $39.52/barrel.
Global crude oil markets have been stabilizing from the **historic lows – i.e. $27/barrel to $40/barrel – since news of Doha Meeting emerged earlier this year. Global analysts and investors have set their eyes onto what fifteen major oil giant producers (OPEC and Non-OPEC associates) bring about during a meeting this weekend.
(**12 year bearish scale)
Over the past few weeks, crude has positioned itself on volatile scale giving a reason to investors for assessing the prospects – whether producers agree to seize or not; the present global crude market remains uncertain.
INSIGHT: The balance of supply and demand in the global oil markets has been out of kilter since Organization for Petroleum Exporting Companies (OPEC) refused to cut production in November 2014.
In a note, entitled ‘Doha is no panacea’, analysts – Damien Courvalin, Jeffrey Currie, Abhisek Banerjee and Raquel Ohana – have stated that the meeting is unlikely to deliver a bullish surprise for global oil markets. Hence, they claimed to be maintaining their price forecast of $35/barrel in 2Q. The note also highlighted a ‘multitude of potential production growth sources’ to keep OPEC crude production growing (source: CNBC).
In addition to this, Goldman Sachs noted that Iran’s crude production has already surpassed expectations; with Iranian exports to take a fleet and other producers pledging to freeze output near record-high levels, an agreement would do little to address a global supply overhang that sees at least a million barrels of crude produced every day in excess of demand (source: Wall Street Journal). On a related note, the oil output from Saudi Arabia is expected to increase in coming months.
Hence, balancing of the crude turmoil is still far from secured.
