Oil: US production could delay the balancing process - RBS

James Nelligan, Research Analyst at RBS, suggests that the US oil production is key to future movements in the oil price and today’s US production data will be key for oil currencies such as CAD and RUB.

Key Quotes

“Purely focusing on US inventories is too narrow an outlook. To balance global supply/demand in the oil market, it is underlying US production that has to do the work. The Global oversupply is estimated to be around 620k barrels per day vs. 1.28 million barrels per day in Q1-16 (EIA estimates). The market is expected to balance in Q2-17 (EIA estimates).

A rise in US production is the main force that could delay the balancing process. US oil production has been declining since January this year, the same point at which the oil price began rallying. More recently, a rising US rig count and rising US production have put the oil price under renewed pressure.”