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Justin Smirk, Research Analyst at Westpac, points out that crude outperformed Westpac’s expectations due to the disruption of oil production from Venezuela & Angola) as well as the US pulling out of the Iran nuclear agreement.

Key Quotes

“Through 2017/2018 global crude production fell below demand. However, were it not for production difficulties in Venezuela and Angola, total OPEC production would have overshot the agreed targeted output by around 25%. US production has surged while non-OPEC production outside of the US is also lifting.”

“Market balance to shift from a deficit to a surplus in late 2018 with inventories starting to build as we move through 2019.”

“Westpac is forecasting Brent to hold around current levels to end 2018 before easing back to US$62/bbl end 2019. As crude prices firmed, forecasts for demand have been revised down.”

“The IEA estimates that if prices average 9% above US$70/bbl in 2018 H2, there is the potential for a further 270,000bpd reduction in demand.”

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