WTI oil expenses took a breather last week to close at $73.80 per barrel after look to blistering gains the week before as traders’ concerns about the guts of global demand growth came to the fore and supply worries eased slenderize on the back of U.S. inventory gains and rising OPEC output. Platts backfire that OPEC oil production rose by nearly 100,000 barrels per day (bpd) in June to 31.99 million bpd – undeterred by falling production from Libya, Iran and Venezuela – thanks to Saudi Arabia developing output by 380,000 bpd to an 18-month high.
According to data from Platts, Libya saw its efficiency fall to 700,000 bpd in June, down from 955,000 bpd in May, and well lower the 1.0 million bpd output achieved in February this year, as a militia ordered the Libyan National Army occupied and blockaded the country’s eastern unrefined export terminals. The oil market seems worried that Saudi, with donate production capacity of around 2.0 million bpd, might struggle to square for falling supply from so many other OPEC members simultaneously, offer a bid in oil prices.
Tuesday’s EIA Short-Term Energy Outlook
Next week sees a tummler of oil market reports from the EIA, IEA and OPEC. First up on Tuesday is the Short-Term Pep Outlook from the EIA. In last month’s report, the EIA said that it has OPEC crude oil production to average 32.0 million bpd in 2018 and development slightly to an average of 32.1 million bpd in 2019. EIA stressed that the grow in production in 2019 is expected to occur despite falling production in Venezuela and Iran.
The EIA coin its forecast before problems kicked off in Libya this month, so sellers will likely focus on any changes to these expectations in the latest update. Thitherto, the EIA said that it assumes these decreases will offset flourishing production from Persian Gulf producers, primarily Saudi Arabia. If the medium now thinks that Saudi is not entirely up to the task of neutralizing the falling manufacture from Libya as well, this could propel oil prices higher.
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Wednesday’s OPEC Oil Market-place Report
In the middle of the week, the oil market will get a glimpse of OPEC’s wishes and analysis of the oil market. In last month’s report, OPEC published a star article outlining the group’s concerns about market developments in the second half of the year. Specifically, the cartel influenced that global economic activity has slowed in the first half of 2018, with development below expectations in the major OECD economies.
OPEC currently visualizes demand for its crude averaging 32.1 million bpd in 2H18, down by 0.5 million bpd from 2H17 but in face with other forecasts from bodies like the EIA. The market wishes be looking for OPEC’s updated signals as to the direction of global demand for the rest period of 2018 and into 2019.
Thursday’s IEA Oil Market Report
The week is rounded out by the IEA’s oil merchandise report. In last month’s report, the group provided its first point of views of 2019 oil demand in which it said that a solid economic out of the limelight and an assumption of more stable prices are vital factors to global demand escalating by 1.4 million bpd in 2019. Risks to these assumptions include by any chance higher prices and trade disruptions, with some governments making allowance for measures to ease price pressures on consumers.
Market focus is tenable to be on the supply side again, with concerns about the state of Libya’s achievement. Last month, the IEA said that, even if Saudi plugs the Iran and Venezuela quantity gap, the market will be finely balanced in 2019 and vulnerable to oil prices respond to higher in the event of further disruptions. Now that Libya appears to be amplifying to these further market disruptions, traders will be keen to see how this swops the IEA’s market narrative.
Technical Picture Favors the Bulls
Oil’s technical illustrate remains favorable to market bulls. Prices found support this week unaffected by $73 per barrel, and the recent consolidation could be a pause to an additional upward cost out movement this week depending on market developments.
Technical indicators and telling averages are all green on the daily and weekly price chart. On the weekly plot specifically, oil has completed what traders call a three outside up bullish turn-round pattern. This pattern is a reliable addition to the completed engulfing composition model on. A bullish engulfing pattern occurs in the first two candles, with the third candlestick substantiating the bullish trend.
The risk to the bullish narrative now is momentum, which may not currently be in oil’s favor. Appraisals have already fully recovered following a retracement to the 61.8% Fibonacci supine of the bullish price run from early February to mid-May this year. Businessmen may be reluctant to push prices any higher in the absence of the next piece of market-critical news programme on the supply or demand front. The psychological price level of $75 per barrel may also be a moneylender working against an aggressive upward price move for oil this week.
Disclaimer: Gary Ashton is an oil and gas economic consultant who writes for Investopedia. The observations he makes are his own and are not intended as investment or merchandising advice. Price chart courtesy of StockCharts.com.