Oil: US supply concerns likely to increase – Nomura
Looking beyond the near-term OPEC meeting, while the demand outlook for oil remains positive, other factors could impact the supply side and cap further large price rises from current levels, according to analysts at Nomura.
“With oil prices now at higher levels, US production concerns may soon start to resurface. The pick-up in US production has been the swing factor that has boosted global supply over recent years. The rig-count data tend to have around a one-quarter lag to oil prices. In response to the decline in oil prices in H1 2017, the rig-count has fallen back. But this could soon start to reverse as higher oil prices encourage increased US production.”
“Furthermore, we think the abnormally large drawdown in US oil inventories since March may be approaching its limits. Inventories tend to decline from May through to October, and therefore seasonals are now turning less positive for additional short-term oil price strength.”