Been long since I touched this, just compiling articles from the net to make sense of whats going on in the Oil market. Feel free give your own opinions.
Venezuela Crisis, Iran sanctions, rising demands, tightening supplies, these factors have drive up Oil prices to their highest level in over three years in May. To address potential supply shortfalls, Saudi Arabia as well as top producer Russia were in discussion of raising oil production by an estimated volume of 1 million bpd. Oil prices started declining on Thursday, 24th May 2018. Market have since then been focused on the OPEC meeting held in 22 – 23 June that could lead to major oil producing nations to pump more crude to address the supply concerns. Ahead of the official decision, signs and analyst estimates reveal that actual increase in production would only be between 600,000 to 800,000 bpd, less than what OPEC was aiming to restore. The actual increase in fact was only 700,000 bpd because several countries that had suffered production declines would struggle to reach full quotas. Since actual increase is actually less than the estimated increase, market sentiment of an oversupplied market reduced and we see oil prices recovering. However, a rising output in Saudi Arabia and Russia and an escalating trade disputes between the United States and other major economies caused raised a concern on the trade balance of the market and oil prices plunged on 2nd Jul early Monday trading.
There has been an uncertainty about how much oil supply will be added to the market given the increase in outputs from Saudi Arabia, Russia and further Trump’s tweet on Saudi Arabia's King agreeing to pump more oil, up to 2,000,000 barrels, made things worse causing greater concerns of an oversupplied market. OPEC reported that its output increased in June, as the group's top producer pumped at its highest level since the end of 2016. Oil Supply outage concerns eases have left oil plunging as well. Libya resolved a major disruption to its crude exports and Tripoli-based National Oil Corp (NOC) lifted a force majeure on four Libyan oil ports, saying production and exports from the terminals would "return to normal levels in the next few hours." A restoration level would lead Libyan production to produce at its full output level of 1.28 million bpd (compared to now 527,000 bpd).
US trade actions against China and the European Union sparked concern about a global trade war that could undermine economic growth and crimp future demand. These trade tensions rose further as President Trump threatens tariffs on another $200 billion of Chinese goods. If trade tensions rise further, and given other uncertainties, it could weigh on business and consumer sentiment. This may then start to negatively impact investment, capital flows and consumer spending, with a subsequent negative effect on the global oil market.
Venezuela Crisis, Iran sanctions, rising demands, tightening supplies, these factors have drive up Oil prices to their highest level in over three years in May. To address potential supply shortfalls, Saudi Arabia as well as top producer Russia were in discussion of raising oil production by an estimated volume of 1 million bpd. Oil prices started declining on Thursday, 24th May 2018. Market have since then been focused on the OPEC meeting held in 22 – 23 June that could lead to major oil producing nations to pump more crude to address the supply concerns. Ahead of the official decision, signs and analyst estimates reveal that actual increase in production would only be between 600,000 to 800,000 bpd, less than what OPEC was aiming to restore. The actual increase in fact was only 700,000 bpd because several countries that had suffered production declines would struggle to reach full quotas. Since actual increase is actually less than the estimated increase, market sentiment of an oversupplied market reduced and we see oil prices recovering. However, a rising output in Saudi Arabia and Russia and an escalating trade disputes between the United States and other major economies caused raised a concern on the trade balance of the market and oil prices plunged on 2nd Jul early Monday trading.
There has been an uncertainty about how much oil supply will be added to the market given the increase in outputs from Saudi Arabia, Russia and further Trump’s tweet on Saudi Arabia's King agreeing to pump more oil, up to 2,000,000 barrels, made things worse causing greater concerns of an oversupplied market. OPEC reported that its output increased in June, as the group's top producer pumped at its highest level since the end of 2016. Oil Supply outage concerns eases have left oil plunging as well. Libya resolved a major disruption to its crude exports and Tripoli-based National Oil Corp (NOC) lifted a force majeure on four Libyan oil ports, saying production and exports from the terminals would "return to normal levels in the next few hours." A restoration level would lead Libyan production to produce at its full output level of 1.28 million bpd (compared to now 527,000 bpd).
US trade actions against China and the European Union sparked concern about a global trade war that could undermine economic growth and crimp future demand. These trade tensions rose further as President Trump threatens tariffs on another $200 billion of Chinese goods. If trade tensions rise further, and given other uncertainties, it could weigh on business and consumer sentiment. This may then start to negatively impact investment, capital flows and consumer spending, with a subsequent negative effect on the global oil market.