Sell Crude Oil Ahead Of The November OPEC Meeting

A major oil sell-off is predicted if OPEC and non-OPEC members frustrate the markets.

Downside risks from declining demand and increasing offer aren't priced into oil costs.

A weak U.S. dollar widens the unfold between WTI crude and OPEC Basket oil costs, making U.S. exports a lot of competitive within the Asia market.

OPEC's efforts to rebalance the oil markets appears to be illusory once taking the impact of the Fed rate hike policy into thought.

West TX Intermediate, or WTI, and brent goose oil costs have up concerning 12-tone system in volatile mercantilism since the Organization of the rock oil mercantilism Countries, or OPEC, meeting in Vienna, Austria, on Gregorian calendar month 21, 2017, despite no clear set up concerning what path OPEC and non-OPEC members can take when the boring decrease of 1.8 million barrels per day, or bpd, expires in March 2018. 

Here's what Russian Energy Minister Alexander Novak told Reuters when the meeting: “I believe that Jan is that the earliest date after we will really, plausibly talk about the state of the market.” alternative oil ministers aforesaid a choice on extending cuts might be created at the OPEC meeting on November thirty, 2017, in step with Reuters.

The risks of holding oil as a money plus have increased considerably, from rising U.S. oil production and exports, a weakening U.S. dollar and also the flattening yield curve, particularly going into the November OPEC meeting next week. 

Ed Morse, head of commodities analysis at Citigroup, told Bloomberg in early November, “There is Associate in Nursing exuberance within the market concerning there being a done deal to increase through the top of 2018 and that i suppose there’s seemingly to be disappointment therein return November. 30,” In our read, a failure by OPEC and non-OPEC members at the November OPEC meeting to arrange to a production cut extension through the top of 2018 may trigger a serious sell-off within the oil market.

According to the trade goods Futures mercantilism Commission, or CFTC, report as of November fourteen, 2017, hedge funds have increased their internet long positions of oil futures contracts to a record level, driving each the WTI and brent goose crude costs to the highest of their mercantilism ranges and well on top of the forecasted costs by the U.S. 

Energy info Administration, or EIA, of $49.70 and $53.01 per barrel, severally. One will argue that a reason to be optimistic is as a result of a golden cross, or GX, once the 50-day SMA crosses over the 200-day SMA, emerged within the oil charts in late Gregorian calendar month, however that's no guarantee of Associate in Nursing oil value gaolbreak as a result of when a GX in early might 2016, the oil market folded concerning 2 months later.

Declining international Oil Demand And Rising U.S. oil Output

The International Energy Agency, or IEA, aforesaid in their November Oil Market Report that it revised their oil demand forecast 0.1 million bpd downward for each 2017 and 2018 as a result of higher costs and comparatively delicate early winter temperatures. 

The agency currently sees oil demand of ninety seven.7 million bpd for this year and ninety eight.9 million bpd in 2018, compared to 98.31 and 99.89 million bpd for 2017 and 2018, severally, forecasted by the EIA in their November short-run Energy Outlook, or STEO, report. 

In fact, the EIA revised 2018 demand downward by 60,000 bpd, from 99.95 million bpd, since their last forecast in Gregorian calendar month.

In a separate report, the IEA aforesaid non-OPEC oil offer is predicted to rise by 0.7 million bpd to 58.1 million bpd in 2017, and by 1.4 million bpd to 59.5 million bpd for next year, LED by higher U.S. output. 

The IEA conjointly aforesaid that OPEC's output in Gregorian calendar month was thirty two.65 million bpd, down 0.4 million bpd compared to last year, and also the compliance with offer cuts is 86 year-to-date. presumptuous that OPEC's output throughout 4Q 2017 is thirty two.65 million bpd and there's a 1.8 million bpd production cut till the top of 2018, then OPEC's offer ought to be expected at 39.3 million bpd this year and 39.4 million bpd in 2018.

The latest EIA knowledge free on Wed showed that U.S. oil production continues to rise to Associate in Nursing calculable record of 9.65 million bpd in November, whereas the exports of oil Associate in Nursingd rock oil product jumped virtually 2 hundredth year-on-year to an calculable half dozen.00 million bpd in November, the second-highest monthly exports on record. 

In fact, within the November STEO report, the EIA revised its 2018 forecast for oil and rock oil product offer from the Organization for Economic Co-operation and Development, or OECD, countries, notably the u. s., upward to 28.60 million bpd, from 28.55 million bpd antecedently forecasted in Gregorian calendar month.

In our read, there'll be a oil surplus in 2018, based mostly upon the most recent IEA and EIA forecasts, whereas a worldwide oil supply/demand rebalance might be in danger if U.S. oil production and exports stay as wild cards.

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