Oil Price Forecast - Feb 26

[dan_s]

"We remain unwaveringly confident in the crude market's long-term bullish fundamentals, and, as our Canadian team detailed last month, we believe the change in market structure (to near-term sustained backwardation) for WTI contracts also dampens the potential headwind from the long speculative position." - Raymond James, 2-26-2018 Energy Industry Brief

Raymond James has not waived from their oil price forecast, which they published on 1-2-2018
WTI Forecast:
Q1 2018 = $60
Q2 2018 = $65
Q3 2018 = $65
Q4 2018 = $70
2019 = $60
2020 = $60

"Where could we be wrong? As always, there are numerous potential wildcards. On the bullish side, there is always the prospect of
further unforeseen outages as civil unrest lingers in Libya, Venezuela, and Nigeria. Additionally, the recent North Sea field outage
showed that accidental mishaps are also inevitable from time to time. Finally, we are modeling acceleration in 2018 U.S. oil
production that might not fully materialize due to oilservice bottlenecks, stagnating well productivity improvements, and/or a more
conservative approach to capital allocation by E&Ps. (On the latter point, we will be closely tracking E&P budget announcements
over the next few months.) Finally, we project that non-OPEC, ex-U.S. supply will grow slightly yet consistently through 2020 despite
sharply reduced spending in those geographic regions. Given that a sizable portion of that uplift depends on project startups, delays
may erase the forecasted growth. On the bearish side, the perennial wildcards of Libya, Venezuela, and Nigeria could potentially see
production uplift if and when the security situation stabilizes. For example, regime change in Venezuela might cause a near-term
spike in oil prices but ultimately could result in an improved environment for the oil industry and thus stabilizing production declines
or even increases. Finally, while oil demand displacement from EV adoption will be irrelevantly small for the foreseeable future, the
broader economic environment (rising U.S. interest rates, global currency volatility, etc.) could lead to lower-than-expected global
demand growth." - Raymond James 1-2-2018

[dan_s]

Investing.com – Crude oil prices settled at three-week highs supported by positive comments from Saudi Arabia on continued production cuts.

On the New York Mercantile Exchange crude futures for March delivery rose 36 cents to settle at $63.91 a barrel, while on London's Intercontinental Exchange, Brent gained 23 cents to trade at $67.27 a barrel.

"A study is taking place and once we know exactly what balancing the market will entail we will announce what is the next step. The next step may be easing of the production constraints," said Saudi Arabian oil minister Khalid al-Falih.

The oil cartel together with Russia agreed in November to extend the 1.8 million bpd output cuts through 2018, to rid the market of excess supplies.

The comments came a day after Baker Hughes on Friday showed the number of oil rigs operating in the US jumped by one to 799, the highest level since April 2, 2015.

Sentiment on oil was also supported by expectations for an increase in crude demand as the cold snap engulfing Europe is expected to encourage some refiners to shelve plans momentarily to enter a period of maintenance.

This time of the year traditionally sees refinery activity slow, this in turn, lowers demand for crude while raising the prospect of a build in supplies. Crude supplies unexpected fell last week, however, as producers were encouraged to sell rather than store crude as current prices traded at a premium to forward prices – a market structure known as backwardation.

Despite the uptick in crude prices money managers appeared to be less bullish on the oil prices, reducing their WTI net-long position – the difference between bets on a price increase and wagers on a drop – for a fourth week in the period ended Feb. 20, according to U.S. Commodity Futures Trading Commission data.

[Gabriel Oak]

"Futures in New York dropped as much as 1.9 percent after IEA Executive Director Fatih Birol said “explosive growth” in U.S. output may extend beyond this year. Investors were also bracing for a government tally on Wednesday that’s expected to show American crude inventories rose to the highest since 2017. A strengthening dollar further eroded the appeal of commodities."

Can someone explain to me why the IEA would use such destabilising / volatility inducing rhetoric that few other large infuluential organistaions would dream of using?

(...other than that the IEA are paid to attempt to suppress the price of oil...with the higher it going the louder they cry)

GO

[dan_s]

I believe IEA has an "agenda" to keep fuel prices low because they know what higher fuel prices mean for Europe;s economy. Remember who funds their budget.

BTW this is the time of year that we MUST build crude oil inventories. Feb & Mar are the low point for demand. Demand will rise in April, as I point out in the last podcast.