Oil's tumble driven by two key fundamental factors

Author: Giles Coghlan | Category: News

OIl's tumbling and here is why

Oil has been on a tumble recently and it is driven, amongst other things (or should I say tweets), by two fundamental drivers

They are projections for an increase in supply and projections for a fall in demand. The price is being hit both ways.

Increase in supply 

Here is what OPEC had to say on the projected increase in supply: 

Global crude exports are expected to increase by around 5.4 mb/d, mostly driven by increasing demand and falling domestic supply in the Asia-Pacific. In the short-term, global crude exports are likely to increase to around 40 mb/d in 2020, up from 38.5 mb/d in 2017, driven by increasing export volumes from the US & Canada, which are estimated to grow by more than 2 mb/d between 2017 and 2020.

Here is the projections chart on supply levels for the next few years.

Fall in Demand

Although oil demand is set to increase by an average annual amount of 1.2 million barrels per day, into 2020 the demand is set to fall. Here are those projections here: (hint look at the 2019 bar chart to see falling demand compared to 2018)

So, there we have it folks. One for your memory banks. Falling oil is being hit by falling demand and increasing supply, particular from the US. Hopefully this will help you trade Oil intelligently in light of the coming/anticipated OPEC production cuts.Those cuts are currently projected to be around 1.4mbd. The OPEC meeting is in Vienna early December on the 6th and 7th.

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