Oil Markets Rattled by New Demand/Supply Imbalance

By Jim Mccaul
Wednesday, November 14, 2018
© pichitstocker / Adobe Stock

Fear of a new oil demand/supply imbalance has rattled the oil market.

Market sentiment has suddenly shifted. Fear that Iran sanctions will cause oil prices to spike to $100+ has been superseded by concern that prices are heading south with no bottom in sight.

Iran sanctions were expected to take a substantial volume of supply from the market. Anticipating this, the Saudis and Russians increased production to offset (take advantage of) the expected loss of Iranian supply. But granting of waivers weakened the sanctions impact and oil demand growth unexpectedly slowed. As a result, global supply is now exceeding demand – and the demand/supply imbalance has the potential to drive prices to levels last seen in early 2016.

Survey results by the U.S. Energy Information Administration (EIA) show that U.S. crude inventories have increased in each of the past seven weeks – and the EIA in its November 7 weekly report said, "U.S. crude oil inventories are about 3 percent above the five year average for this time of year." The next survey results on November 15 will likely show further build in inventory.

Oil is a volatile market. On November 13, Brent fell to $65, down 7 percent from the previous day. WTI dropped to $55, down almost 8 percent. So much for $100+ – at least for a while.


(Source: International Maritime Associates, Inc.)

Categories: Finance Oil

Related Stories

EnerMech Nets Long-Term Servicing Contract for Triton FPSO

EnerMech Nets Long-Term Servicing Contract for Triton FPSO

Brazil Plans Additional Offshore Oil Auction for 2025

Brazil Plans Additional Offshore Oil Auction for 2025

Bonaparte CCS Project Awarded Major Project Status

Bonaparte CCS Project Awarded Major Project Status

Current News

Floatel Secures Longer Stay for Accommodation Rig off Australia

Industry Consortium to Asses Floating Nuclear Plants for Mediterranean Sea

Longitude Lines Up More Work at Shell’s West Delta Deep Concession off Egypt

MeyGen Tidal Energy Tech Sets New Operational Record

Subscribe for OE Digital E‑News

Offshore Engineer Magazine