Crude oil ended the day flat yesterday and is rising this morning. As expected, OPEC and Russia agreed to maintain production limits until the end of 2018. This extends the previously announced production cuts by another 9 months. OPEC also suggested that supplies could be increased before the end of 2018 if crude oil markets overheat. While OPEC is voluntarily reducing supply, US crude output continues to make new records. According to last week's data from the EIA, US output rose to 9.68 million barrels per day. Based on the EIA's figures, US crude supply has now exceeded the last peak achieved in 2015. If supply growth continues at its current trajectory, the crude oil market is likely to become oversupplied in 2018 despite OPEC's best efforts. Our short and medium-term outlook on crude remains bullish.
WTI is currently trading just above $57.60. Brent crude is currently above $62.90.
Looking at US crude oil stocks, the most recent EIA figures (November 29) showed falling crude oil stocks and rising refined inventories. Crude oil inventories were lower than estimates (-3.4m vs. -3m expected). Gasoline stocks were up (+3.6m vs. +1.4m expected) while distillate stocks (2.7m vs. +0.7m expected) were also up. Looking at reactions in markets, crude oil prices rose following the EIA report.