The return of the geopolitical risk premium coupled with the strength of global demand and continued OPEC compliance led to Brent rallying to two-year highs at the end of 2017. Above all else, the state of the market at year-end showed that the Organization of Petroleum Exporting Countries (OPEC)’s sustained efforts have had a tangible impact on supply balances.
When combined with better-than-expected demand figures, the foundation provided by OPEC has been the springboard for the higher prices seen at the end of 2017. 2018 has continued where 2017 left off, with Brent briefly breaking $70, a price level deemed unobtainable ~6 months ago. Can this price level be maintained for the rest of 2018? Or will the growth of non-OPEC supply spoil the party?
In an article for Commodities Now, Joel Hancock, Natixis’ Oil Analyst, discusses the market outlook for 2018.
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