Related: Oil Looks for Better Things as Q3 Begins
Last year, OPEC and other major oil-producing countries agreed to pare output to support prices, but the performance of oil futures indicates that move is not having the desired impact. Additionally, global oil supplies remain elevated, but there are some indications those supplies could decline a bit in the second half of the year. Oil supplies “will decline by about 1 million barrels a day in the second half, Citigroup Inc.’s Head of Commodities Research Ed Morse said in a report,” reports Bloomberg.
“The global oil supply glut hasn’t eased as fast as we thought it would, but we expect to see a reduction in global oil inventories—and a rebalancing of supply and demand—in the second half of the year. Current OPEC compliance with production cuts is well above the historical average and it typically takes two to three quarters for inventories to reflect such cuts,” according to BlackRock.
While demand has yet to catch up to elevated supplies, rebounding economies in Europe and steady economic growth in the U.S. could at least keep oil prices steady around current levels in the second half of 2017.
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