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Oil Market Snapshot – November 2017 OPEC Band Back Together For Another Viennese Waltz

Brent holds above $60/bbl as speculators amass record net long positions in the run up to OPEC’s 173rd meeting on 30th November. Futures pricing indicates a market in steep backwardation, which we reflect in our increased 2018 price estimates. Our Brent price forecasts for 2017 and 2018 are revised higher as a result. We trim our forecast for 2017 global oil demand growth slightly on weaker US demand data. However, we raise 2018’s demand forecast in anticipation of stronger growth in India. US inventories are at seasonally similar levels to 2015, as Saudi Arabia strategically reroutes cargoes away from American inventories. The majors have held capex broadly flat for the second quarter in a row, even as rising prices add to net income, suggesting a cautious approach to the present recovery. Money managers are betting that an extension to the OPEC-led production cut deal will be announced, but key non-OPEC partner Russia remains sceptical that now is the time. Current intelligence is for a nine month extension (to the end of 2018), reviewed after the first three months. We present highlights from the most recent edition of our Deepwater Insights series, examining future prospects in the Mediterranean....

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