Energy Prospectus

On 4/19/2018, Reuters reported the global oil glut has been virtually eliminated, according to a joint OPEC and non-OPEC technical panel, thanks in part to an OPEC-led supply cut deal in place since January 2017. The meeting of the Joint Technical Committee (JTC) earlier on Thursday found that oil inventories in developed nations in March stood at 12 million barrels above the five-year average, one of the sources said. That's down from 340 million barrels above the average in January 2017. Although OPEC is closing in on the original target of the pact, there is no indication yet that top exporter Saudi Arabia or its allies want to wind down the supply cut.

On 4/20/2018, Reuters reported OPEC and non-OPEC oil producers could begin easing up on output curbs before the end of the year, Russian Energy Minister Alexander Novak said on Friday, sounding a bearish tone in contrast to Saudi Arabia's bullish stance. The Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC), which monitors the deal, met on Friday in Jeddah, Saudi Arabia, ahead of an OPEC-led meeting set for Vienna in June. "The agreement lasts until the end of the year. In June, we can discuss, among other issues, a question about reduction of some quotas during this time, if it is expedient from the market's point of view," Novak said ahead of the JMMC meeting, TASS news agency reported.

On 4/19/2018, Reuters reported oil investors are taking no chances that Iran’s nuclear deal with Western powers will remain intact next month. Open interest in $75, $80 and $85 May calls has risen by nearly 60,000 lots in the last month, and almost 10,000 of that total has been added in the last five days alone.

On 4/18/2018, Reuters reported top oil exporter Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel, a sign Riyadh will seek no changes to an OPEC supply-cutting deal even though the agreement's original target is within sight. Industry sources have linked this shift in Saudi Arabia's stance to its desire to support the valuation of state oil company Aramco ahead of the kingdom's planned sale of a minority stake in an initial public offering.

On 4/17/2018, Reuters reported Chevron Corp (CVX-NC) said on Tuesday two of its executives were arrested in Venezuela, a rare move likely to spook foreign energy firms still operating in the OPEC nation stricken by hyperinflation, shortages and crime. Venezuelan Sebin intelligence agents burst into the Petropiar joint venture's office in the coastal city of Puerto La Cruz on Monday and arrested the two Venezuelan employees for alleged wrongdoing, sources with knowledge of the detentions told Reuters. Venezuela's Information Ministry and state-run company PDVSA did not respond to information requests about the detentions, which come amid a crackdown on alleged graft in the oil sector.

On 4/20/2018, Reuters reported U.S. President Donald Trump accused OPEC on Friday of "artificially" boosting oil prices, drawing rebukes from some of the world's top energy exporters. It was unclear what triggered the tweet, Trump's first mention of OPEC on social media during his term.

Raymond James on 4-23-2018:
"For much of 2017, we began our oil price updates with some variant of “fundamentals are looking good, but the oil market just isn’t
getting it”. Well, no longer. With WTI and Brent this month reaching the highest levels since 2014, the market is clearly starting to
“get it”. More importantly, we envision more room for the oil rally to continue into the latter half of 2018, and we are becoming
increasingly bullish on 2019 and the long-term picture as well. So far, oil market fundamentals (i.e., inventory reductions) have been
even more bullish than we had thought at the start of 2018. Given these strong oil inventory reductions and improving oil
supply/demand drivers (lower Venezuela output and higher demand), we now believe that our already above-consensus price deck
is not high enough. For 2018, we are raising our full-year WTI forecast from $65/Bbl to $68/Bbl, and our year-end exit from $70/Bbl
to $75/Bbl. For 2019, we are raising our WTI forecast from $60 to $70. Beyond 2019, we now believe WTI oil prices will need to
average at least $65 for U.S. producers to offset the negative impact from rising production declines."

Raymond James - Why they are increasing their oil price forecast.

"Global supply/demand model is pointing to draws of 800,000 bpd in 2018 - more than we originally expected.
In January of this year, we forecasted that 2018 global oil inventory draws would average 600,000 bpd. Since then, we have updated
our model to incorporate the most recent supply/demand trends and inventory data. So what has changed? Short answer: it looks
more bullish than we originally thought. While 2018 supply (99.2 million bpd) is 200,000 bpd slightly higher than our January model
(due to rising U.S. supply offset by falling Venezuela supply), this is outweighed by 2018 demand that is 400,000 bpd higher; in other
words, our original demand numbers were too conservative. In aggregate, our 2018 oil model is now 200,000 bpd more
undersupplied (or tighter) than we initially forecasted. This translates into global inventories declining every quarter, with an
800,000 bpd average decline for the year. As shown in the chart below, this carries significant read-through for OECD inventories."