Analysts Says OPEC Must Cut Supply to Balance Oil Markets
Tweet
Share
E-mail
Analysts at Canaccord Genuity believe the apparent supply demand balance in the oil markets is a result of "non-recurring" demand.
"In our view, the preponderance of this imbalance the first half of the year was absorbed by non-recurring storage that includes the Chinese SPR (80 Mmbbls), Saudi Arabian stocking prior to the institution of Iranian sanctions (40 Mmbbls) and Iranian floating storage (20 Mmbbls)," said an analysts at Canaccord.
"Accordingly, without this incremental demand, the oil market would have experienced 0.8 Mmbpd greater over supply, which probably would have lowered Brent oil prices $10 relative to the prices evidenced the first half of the year," continued the analyst.
As non-recurring demand fades, analysts think OPEC doves (Saudi Arabia, Kuwait, UAE) will need to cut production to reduce supply accommodation.
Crude oil is trading lower early on Monday, with WTI just above $90 and Brent near $114.
United States Oil ETF (NYSE: USO) and iPath S&P GSCI Crude Oil Total Return ETN (NYSE: OIL) are lower by 1.7 percent.
"In our view, the preponderance of this imbalance the first half of the year was absorbed by non-recurring storage that includes the Chinese SPR (80 Mmbbls), Saudi Arabian stocking prior to the institution of Iranian sanctions (40 Mmbbls) and Iranian floating storage (20 Mmbbls)," said an analysts at Canaccord.
"Accordingly, without this incremental demand, the oil market would have experienced 0.8 Mmbpd greater over supply, which probably would have lowered Brent oil prices $10 relative to the prices evidenced the first half of the year," continued the analyst.
As non-recurring demand fades, analysts think OPEC doves (Saudi Arabia, Kuwait, UAE) will need to cut production to reduce supply accommodation.
Crude oil is trading lower early on Monday, with WTI just above $90 and Brent near $114.
United States Oil ETF (NYSE: USO) and iPath S&P GSCI Crude Oil Total Return ETN (NYSE: OIL) are lower by 1.7 percent.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Crude Inventory Fell 6.1 Million Barrels Last Week, Says EIA
- 19 Millions Barrels of Oil flowed out of the Hormuz Strait yesterday - Trump
- Deutsche Bank cuts gold outlook as Fed repricing weighs on prices
Create E-mail Alert Related Categories
Commodities, ETFsRelated Entities
Standard & Poor's, Crude Oil, OPEC, Canaccord GenuitySign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
