WTI crude prices are down showing a 1.5% loss. Weakness in the dollar was unable to help keep oil prices buoyed, while the breach in the Brent benchmark above $50.0 over the last day was seen as bullish-affirming price action. The looming OPEC-led meeting of major oil producers on Monday in St. Petersburg is an added bullish influence, along with tensions between Kuwait and Iran. The UAB’s energy minister said today that he hoped the OPEC-led production trimming would have a significant impact on crude prices in the third and fourth quarter.
Crude oil prices were unable to hold gains seen early in the week. This is a divergence in though as many believe Saudi Arabia will come to the rescue and reduce exports. Prices tumbled 1.5% on Friday, but held support near the 10-day moving average at 46.18. Resistance on crude oil is seen near the weekly highs at 47.74. Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation.
Unofficial OPEC Meeting will be Important
Next week will be a very import week for the crude oil market. While global demand appears to be edging higher, the markets are clearly focusing on supply, which has many components. While production will likely continue its current pace, next week’s unofficial OPEC meeting in Russia will be the catalyst that drives prices.
While there will unlikely be any production changes, Saudi Arabia has floated the idea that the country will reduce exports globally by 1-million barrels a day. The reduction in Saudi exports has already showed up in U.S. import numbers, despite increases in U.S. domestic production. Now, the Saudis are not saying they will reduce production, they are just saying they will reduce exports, which is directly targeting prices. If inventories around the globe begin to shrink, except for inventories in Saudi Arabia, then there corning the market technique will have worked.
This week’s inventory data showed a larger than expected draw in petroleum inventories, which was likely cause by the reduction in Saudi exports. If the cartel cannot reach some form of agreement that will help oil bulls push prices higher, the markets will likely punish crude prices in the later stage of next week.
U.S. crude oil production forecast to average 9.9 million barrels per day in 2018
Meanwhile, the EIA forecasts that total U.S. crude oil production will average 9.3 million barrels per day in 2017, up 0.5 million barrels a day from 2016. In 2018, crude oil production is expected to reach an average of 9.9 million barrels a day, which would surpass the previous record of 9.6 million barrels a day set in 1970. Most of the growth in U.S. crude oil production from June 2017 through the end of next year is expected to come from tight rock formations within the Permian region in Texas and from the Federal Offshore Gulf of Mexico.
Imports Dropped This Week
The Department of Energy reported on Wednesday that U.S. crude oil imports averaged 7.8 million barrels per day during the past month which is down 1.7% month over month. The overall decline in imports has not been offset by increases in production which rose by 30K barrels domestically in the United States during the past week.