Crude oil prices to be under pressure in first half of 2018: S&P

Crude oil prices to be under pressure in first half of 2018: S&P

Chennai, Dec 3: Oil prices are expected to come under some pressure in the first half of 2018.
Crude oil prices rose after key Opec ministers expressed a preference for extending crude output cuts until the end of next year.
S&P Global ratings says oil prices are likely to remain range-bound supported by Opec cuts and capped by US shale growth.
Though oil has rebounded, it remains well below the highs of the past decade, unlike some metals such as copper and zinc. This is despite the discipline in oil supply and steady demand. Moderating inventory levels are expected to lift some drag on spot prices. “This also brings the US shale response into sharper focus, said global agency S&P Global. US shale oil producers raised production to encash on the boom caused by the Opec production cut. However currently promoters of shale oil fields have asked companies to refrain from over production as they want viability of companies coming back. Hence, how they respond to Opec’s decision will be important for market going ahead. Even S&P Platts expect WTI to remain around $4/bbl discounted compared to Brent oil to compete in the export arbitrage.
Chris Midgley, head of Analytics at S&P Global Platts said that 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,” said Midgley, adding that Northern Hemisphere summer demand should provide more support to Brent prices in the second half of next year.