Markets

IEA trims demand outlook for oil amid rising prices

IEA trims demand outlook for oil amid rising prices

Elsewhere, supply concerns have been mounting over the last week after President Donald Trump the U.S. pulled out of the Iran nuclear deal - a move that reimposes sanctions on Iranian barrels.

There are several ways to play higher oils prices.

Currently, OPEC and non-OPEC producers have restricted themselves to 32.5 million bpd.

US crude is trading at a hefty discount to Brent, the worldwide marker, thanks to sharp rises in USA production to 10.7 million bpd, which has left the American domestic oil market well supplied.

"Because if you reach infrastructure constraints in terms of ability to put additional barrels on the market and you're going to be taking off Iranian barrels - and don't forget Venezuelan production, which has played a huge role in balancing this market - and they (OPEC) could lose a million barrels year-on-year".

According to chief executive at Sun Global Investment Mihir Kapadia, so far 2m barrels of oil previously produced by Iran has been taken off the market.

Oil hits high

US shale production has been in the ascendency amid OPEC and non-OPEC production cuts, with higher prices making production viable. Investors are keeping a close watch on how much crude will end up being removed from the global market, and whether other major producers will ramp up output to fill any gaps.

First, the Iranian situation is a threat to future supplies, not current supplies; the potential collapse in Venezuela is also a threat to future supplies (although current supplies are dropping too).

This week's inventory cycle has been a head-scratcher for participants in the energy markets. Spot crude prices are at their steepest discounts to futures prices in years due to weak demand from refiners in China and a backlog of cargoes in Europe. "It would be extraordinary if such a large jump did not affect demand growth".

Despite these downward forces, the market retains support from OPEC and other producers' production cuts and US sanctions on Iran. OPEC's latest monthly report says that 90 percent of supply growth outside the cartel this year will occur in the United States. China's refinery runs rose almost 12 percent in April from a year earlier, to around 12.1 million barrels per day, marking the second-highest level on record on a daily basis, data showed.

The news that Total is planning to withdraw from its large Iran gas field deal has pushed prices steadily higher on Thursday. Even though the energy minister of Saudi Arabia promises "oil market stability for the benefit of producers and consumers", he has been coy about providing specifics. As Reuters noted, based on conversations with OPEC sources: "OPEC is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran". This creates a situation whereby either Europe will attempt to change the mindset of the U.S., or they have to withdraw any investments that have been recently made into the Iranian economy.

Woman detained after feces flinging incident at Langley Tim Hortons
While the video has no sound, it shows the woman confronting the cashier and getting more and more irate. The woman was detained by authorities and released with instructions to attend court at a later date.


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