OPEC published its monthly report on the oil market today. Its tone is rather positive as a projection of production for the next ten years has been lowered for non-OPEC countries. On the other hand, while the restriction agreements are respected by all its signatories, growing supply form Libya and Nigeria is a concern.

OPEC forecasts that supply from outside the cartel will increase by 840,000 barrels per day this year while previously estimated 950,000 barrels per day. In addition, all 11 countries that committed to curb production by March 2018 fulfilled their assigned targets – in May, their combined output totaled 29.729 million barrels. However, Nigeria is increasing its oil extraction potential as well as currently affected by civil war Libya. Including OPEC countries, total supply rose by 336,000 bpd to 32.14 million bpd.

link do file download link

Libya and Nigeria are rapidly rebuilding their oil extracting potential, reducing the effectiveness of the recently extended OPEC agreement for another nine months. Source: Bloomberg

Also, worth mentioning details of the report is a fact that OECD countries’ raw material stocks declined to 3 billion barrels but it is still 251 million barrels above the a five year average. OPEC expects a significant increase in global demand in the second half of the year, which should foster decline in oil stocks.

The report is not a breakthrough for the oil market. Much more investors’ attention could focus on publication of API report at 21:30 BST. There was a significant rebound of oil stocks which was reflected in a significant price declines after the publication of the API report last week. It could be another signal leading to a decline in oil prices if the API report disappoints. However, it is worth recalling that the previous API estimates did not match the official DoE report (the API pointed to a decline in inventories and the DoE to increase).

Currently the key support for WTI is $45.57 a barrel where a ’pin bar’ occurred around this level. But since we are still in a down trend, further move to the south can not be ruled out.

link do file download link

 WTI oil remains in a downward trend for quite some time now. Only a larger decrease in stocks could lead to a greater rebound in oil prices. Source: xStation5