6 March, 2018
The Brent crude quotes during the Thursday trading session, reached a minimum level for 2 weeks, continuing to resonate from the release of government data on the change in reserves and the volume of oil production for the past week. According to the data published by the US Energy Information Administration (EIA), last week, oil reserves rose by 3 million barrels, gasoline stocks increased by 2.5 million barrels. It is important to note that the growth in gasoline stocks does not correspond to seasonality; on the contrary, in the period of servicing at refineries, inventories actively decline. In turn, the consumption of petroleum products begins to grow actively before the driving season in the US, which begins on 28 May. However, this is still far away. Even greater pressure on oil quotes was brought on by EIA reports that the volume of oil production in the US reached a new maximum of 10.283 million barrels per day.
According to the forecasts of the Energy Information Administration, the total oil production in the US in 2018, will increase by an additional 1 million barrels per day. As a result, American manufacturers can beat Russia and take first place in oil production in the world. Earlier, the International Energy Agency also warned about this, arguing its position on the significant increase in the daily production of hydrocarbons in the US. In particular, the average increase in weekly production in the US this year exceeds 70 thousand barrels, that is, 3.5 times higher than a year earlier. Given the above, market participants continue to actively discount the risks of excessive black gold mining in the US, which undermines the efforts of the Middle East oil cartel to stabilise the price environment, whose goal is to restore the balance of supply and demand in the market, providing conditions for a stable growth of quotes. However, without a solidary decline in production in the US, it is simply impossible. Against this background, we recommend taking short positions on Brent in order to consolidate the asset below $ 60 per barrel.