We are steadfast in our prediction that the global oil market is rebalancing. Reports of tightening global oil and product inventory should allow this market to stand tall to normal seasonal weakness. Still, we may have to use some defensive strategies in the short term to overcome some short-term negative bias. Despite reports of rising OPEC put non-Opec compliance to cuts is the highest it’s ever been. OPEC compliance over the length of the agreement is also the best it’s ever been.
Reuters reports that “The leaders of Saudi Arabia and Russia, the world’s biggest oil exporters, are expected to discuss cooperation on oil production and differences over Syria and Iran on Thursday during the first visit to Moscow by a reigning Saudi Monarch. A slew of investment deals, including on a liquefied natural gas project and petrochemical plants, could also be signed during King Salman’s trip and plans for a $1-billion fund to invest in energy projects are likely to be finalized. The visit, including talks in the Kremlin with President Vladimir Putin, reflects a rapid deepening of ties between Russia and Saudi Arabia, driven by a mutual need to stem a drop in global oil prices.”
Andrew Weissman, of EBW AnalyticsGroup, reports that the November 2017 natural gas contract reached a 16-month low as spot market demand plunged 5.3 Bcf/d week-over-week—pulling cash market prices to as low as $2.72/MMBtu on Tuesday. It remains uncertain when sufficient support will materialize to prevent additional declines, but a further slide cannot be ruled out. The next two EIA Weekly Storage Reports, however, are projected to wipe out the existing storage surplus vs. the five-year average, providing support for NYMEX natural gas futures. At Tuesday’s gas closing prices, the storage deficit vs. the five-year average may approach 200 Bcf by the end of the year in WDT’s most-likely weather scenario—despite rampant Lower 48 production growth.