Crude Oil prices have stagnated for a week at around $102 per barrel. Uncertainty surrounding future economic growth, particularly in emerging market economies and the U.S Federal Reserve winding down its asset purchase program hasn’t had an impact on crude oil prices.
Crude oil price strength is a reflection of the OPEC willingness to cut supply should global demand weaken.
The U.S Energy Information Administration (EIA) will release tomorrow as every Wednesday its weekly information on petroleum inventories in the U.S. The U.S.A inventories influence Crude Oil prices globally.
Crude Oil prices are determined by supply and demand and with stronger economic outlook in the near future and after the recent weather events in the U.S.A high inventories will be of concern; but unlikely to dent Crude Oil prices.
The Chart is in a strong position for Crude Oil prices to increase. It seems unpredictable that prices will retreat anytime soon. During periods of economic growth demand has to remains high for lower inventories to persist. Equity markets and specially oil companies are poised to growth further and so should the commodity prices (Crude Oil).
OPEC HIGHLIGHTS Feb 2014
World economic growth for 2013 and 2014 remains at 2.9% and 3.5%, respectively. The 2014 forecast for the OECD has been revised up by 0.1 percentage points (pp) to 2.0%, compared to 1.2% in 2013. In contrast, China’s growth for 2014 has been revised down by 0.1 pp to the 2013 growth level of 7.7%, while India’s 2014 forecast remains at 5.6% and at 4.7% for 2013. The recent trend confirms the acceleration in economic growth in the OECD, compared to a slowdown in emerging economies.
World Oil Demand
World oil demand growth for 2013 was revised up by 30 tb/d to stand at 1.0 mb/d, mainly based on upward revisions for OECD Americas and Europe. For 2014, world oil demand growth is expected to increase to around 1.1 mb/d, revised up by 50 tb/d from the previous month.
World Oil Supply
Non-OPEC oil supply growth in 2013 is estimated at 1.28 mb/d and is expected to increase slightly to stand at 1.29 mb/d in 2014, with growth mainly in the US, Canada, and Brazil, while Norway, UK and Mexico are seen declining. OPEC NGLs are expected to increase by 0.15 mb/d in 2014. In January, OPEC crude production according to secondary sources averaged 29.71 mb/d, up 28 tb/d from a month ago.
Balance of Supply and Demand
Demand for OPEC crude remained unchanged from the previous report at 29.9 mb/d in 2013, a decrease of 0.5 mb/d from the previous year. In 2014, required OPEC crude is forecast at 29.6 mb/d, also unchanged, and down by 0.3 mb/d from a year earlier.