Bearish EIA Report Sends Oil to the Ditch

Bearish EIA report sends oil prices to the ditch. On the likelihood that shale output might rise, curbing OPEC-led supply cuts.

Brent went down around 0.30% or 21 cents at $69.38 per barrel, while WTI crude dropped to $63.98 per barrel on a bearish EIA report.

Shale oil output is likely to rise by 1.8 million barrels daily (bpd) during the next year, which matches the volume of output cuts implemented by OPEC, Russia, and the Energy Information Administration (EIA). Additionally, shale oil is expected to rise to 6.438 million barrels per day in January, 24,000 bpd up from December’s figure.

Rumors that OPEC fears that the world’s central banks would act against the oil-driven leap in inflation by accelerating the pace of policy tightening. Therefore, the oil powers may talk down oil prices.

Latest from the OPEC Monthly Report

OPEC crude output ticked at +42tbd in December – secondary sources, while Saudi Arabia production came in at -11tbd in December.

The reported global oil supply in December was +0.4mbd, while the global oil demand in 2018 is expected to hit 98.51 mbd, compared with the 2017 global oil demand revised up to +40tbd.

The bulk of growth from non-OECD is expected to rise 1.24mbd.

Separately, non-OPEC oil supply in 2018 saw an upward revision to +0.16mbd, prompted by higher growth expectations from oil powers like US and Canada.

Sensitive to the news, WTI crude hovers now above $63.70 per barrel, while Brent crude is at $69.04 per barrel.

USDCAD on the Rise

Following the not-so-charming ADP Canada National Employment Report, USDCAD ticked higher, close to the 1.25 handle. As the job market has seen a slowing down in pace in December and lost 7,100 jobs, while the US dollar gained momentum, supported by the US Treasury bonds, USDCAD started at 1.24633 and as of writing hovers above 1.24556.