The Oil prices advanced on Friday and are heading for the best gains since mid-May thanks to the production cuts in the US underpinning the hopes for a market rebalance.
According to the Energy Information Administration (EIA), the US Oil output fell by 100,000 barrels per day to 9.3 million b/d last week, while Oil production in Libya reached 1M barrels per day. The prices also benefited from the Dollar´s slump.
Market players talk about signs of a recovery in the North Sea. This, in turn, may mean that those “bearish” sentiments that pushed prices down last week and provoked a serious reduction in long net positions were not entirely justified.
Another bearish signal may be the strengthening of Oil production in Canada, as reported by the Financial Times. The country has the third largest Oil reserves in the world and is able to increase the hydrocarbon production, jeopardising the implementation of the OPECs agreement aimed at restoring the balance in the Oil market. In the recent months, the Canadian Oil companies have reduced CapEx, but the old production fields will be maintained for at least 18 months.
The Canadian Petroleum Producers Association forecasts an increase in Oil production by 270,000 b/d in 2017 and another 320,000 b/d in 2018. The production growth in Canada may be lagging behind the US for the next several years, said the senior director of the analytical company IHS Markit.
The Pound is stable dismissing release of a weak confidence index of British consumers, which fell in June deeper than expected amid the parliamentary elections and the beginning of the negotiations about the terms of the UK’s exit from the European Union. The British are increasingly concerned about their own finances and for the future of the country’s economy. The reading of the indicator in the current month decreased to minus 10 points, the minimum since July 2016, when the British responded to the results of the referendum on Brexit, compared to minus 5 points in May. Dollar futures flattened near 95.50 ahead of the weekend.
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