OPEC Monthly Report
We have just had the latest monthly report from OPEC, In July, OPEC production increased by 41k b/d to average 32.32mln b/d, according to secondary sources. Elsewhere, Non-OPEC oil supply in 2019 is projected to reach an average of 61.75mln b/d, indicating an upward revision by 106k b/d. The important news is In 2018, oil demand growth is anticipated to increase by 1.64mln b/d, 20k b/d only lower than last month’s projections, mainly due to weaker-than-expected oil demand data from Latin America and the Middle East in 2Q18.
Looking at the price action we have seen a small dip in prices following the release of the report. We all know that OPEC is trying to increase production at a gradual pace but the new news is the drop in demand. We are currently trading 0.65% lower on the session down from the highs of $75.24/bbl seen last month. As more data comes in about increased supply we will be looking to the demand side to prop up prices. Issues in Turkey could possibly dent growth outlooks for some of the major economies and this is where demand could falter.
Looking at the price action the spot WTI price has been well supported at the $66.70 level and there is every chance we could get there again. On the weekly chart, a supportive trendline looks to be keeping prices in check and if there are supply disruptions in Turkey or more spats between Iran and the US we could come back close to the $70/bbl handle....