Production and stocks. According to the latest weekly report published by the EIA, the US crude stocks increased by 1.7 million barrels up to 366.4 million barrels 2 weeks ago. Analysts had anticipated a 1,5 million increase.
The OPEC released another report on October 10th. According to the report, the global demand for crude oil remains the same around 0,9 million barrels a day. It is expected to decline down to 0.8 million barrels in 2013.
At the same time, the global economy is expected to grow by 3/1% this year. The revised figures are lower than the one given in the previous forecast.
As of September 2012, the OPEC produces 31.1 million barrels of crude oil a day, which is 254 million b/d more than in August 2012.
The demand for the OPEC oil is expected to reach 30.1 million barrels a day, which is 0.2 million more than the previous forecast.
Non-OPEC countries are expected to boost their oil exports as well up to 0.6 million barrels a day in 2012 and 0.9 million barrels a day in 2013.
Geopolitical factor. Geopolitical risks are growing as the current confrontation between Iran and Israel threatens to escalate into a full-fledged armed conflict with unpredictable consequences for the entire world. The relations between Turkey and Syria are deteriorating as well. Therefore, the Middle East is the world’s major hotspot and concern.
Therefore, the following factors drive oil prices:
Bearish factors:
· Global economic slowdown
· Substantial US crude stocks
· Higher oil production and export from OPEC countries
· Eurozone crisis
Bullish factors:
· Geopolitical risks in the Middle East
· Oil production decline in Iran
· Oil sanctions against Iran (new sanctions are possible).
The chart below, courtesy of , reflects the current state of affairs in the market of WTI oil. The price is moving within a bearish sloping channel and will probably retain the current tendency. Consolidation within the 94-96 range looks probable as well.
