Oil: Has excess supply been absorbed already? - NBF
According to Krishen Rangasamy, analyst at National Bank Financial, excess supply in the global oil market may soon be absorbed, with the Saudi Arabia delivering on last December’s pledge (with Russia) to cut oil production.
“Latest data from OPEC indeed shows Saudi output falling from a record 11 million barrels per day to just 10.6 million barrels per day in December. This 4% monthly decline was complemented by a 5.4% cut in sanction-hit Iran. And with further OPEC production cuts in the cards, excess supply in the global oil market may soon be absorbed.”
“The oil market is so close to balance that a larger-than-expected decline in supply (e.g. unscheduled disruptions to production) or increase in demand (e.g. global GDP growth surprises on the upside) could be enough to return it to an excess demand situation, boosting global oil prices in the process.”