Stability Is Returning To Oil Markets
"The last couple of years have been turbulent for the international oil market and all of its players. But there are signs that the waters are beginning to calm, as traders and investors wait and see how OPEC’s cuts work.
Benchmark prices have stabilized in the last few days, and they might even start rising as the market gets used to growing production from Libya and Nigeria and the decline in compliance rates among OPEC members taking part in the cuts.
Reuters yesterday quoted a few energy analysts as saying that further production increases in Nigeria and Libya will not make a big splash, as the market already expects them and has factored them in. Granted, this means that prices are unlikely to rise above US$50 anytime soon unless OPEC decides to deepen the cuts, which is not at all likely, but it also means that the market is moving towards stability.
U.S. output is also rising but—and this is the key—the rate at which it is rising has slowed. New rig additions in the last couple weeks have been fewer than in previous weeks—as Oilprice’s Nick Cunningham noted in a recent analysis—and the Energy Information Administration reported two consecutive weekly draws in inventories of a combined 13.8 million barrels. This may be temporary, thanks to driving season, but it’s still good news for the more bullish market participants.
In further good news for oil bulls:
https://oilprice.com/Energy/Energy-General/Stability-Is-Returning-To-Oil-Markets.html