The oil market will be stronger and more stable in 2018

A report by Ship & Bunker International points out that the crude oil market is headed towards a good, balanced price in the year of 2018, and this stability may be extended for a longer period of time.

The report claims that supply availability will be very limited during the first quarter of next year, noting that the producers have done a good job towards dealing with the supply issue in the oil markets. Oil prices fell at the beginning of this week due to increases in US production and weak data on demand in Japan, the world’s third largest consumer of crude oil.

In light of the approaching of the ministerial meeting of the OPEC countries, big oil producers have asked for an extending of output cuts until next year. The oil market is currently in a period of anticipation of this meeting, the outcome of which is considered to be extremely important.

This state of anticipation has led to a relaxation of large-scale transactions and the postponement of many decisions affecting the industry, until after the results of the meeting will have been studied. However, the majority of producers enter this meeting agreeing on the need to continue joint work and expand the agreement and prolong the period of the reduction.

Crude oil prices fell last week, after seeing a 5-week continuous growth, due to strong increases in supplies from US production. It should be noted here that global demand for crude oil remains volatile, and has a rapid and effective impact on market stability and price growth. The IEA’s cut in demand growth has led to significant price drops over the past week.

Oil prices fell yesterday as market participants are starting to take a cautious approach, ahead of the OPEC meeting next week. Brent crude fell about 77 cents to 61.95 dollars a barrel, while US crude oil “West Texas Intermediate” dropped about 36 cents, to 56.19 dollars a barrel.

The output cut agreement is expected to end in March 2018, and OPEC claimed the demand for OPEC crude next year is 33.42 million barrels per day which is 360,000 bpd more that its initial forecast.