“In agreeing to extend current production quotas OPEC and non-OPEC nations are managing a fine balance which is likely to maintain prices at current levels in the near term. Normalised stocks are lower than generally thought because of new infrastructure builds, stronger demand and higher exports of crude and products. However, weak seasonal demand and stock builds will put pressure on prices in the first half of 2018. Our Analytics team expects the Northern Hemisphere summer demand should provide more support to Brent prices in the second half of next year and we expect WTI to remain around $4/bbl discounted to compete in the export arbitrage.
Three years of lower oil prices have resulted in strong demand underpinned by consumer hedonism towards energy intensive modes such as air travel and SUVs. Looking beyond next year, we anticipate potential supply tightness as lower investment curtails production growth against continued robust demand, supported by low prices and healthy economic growth.”
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