That was a Bullish OPEC Report
Headlines read that the Opec report today is worse than the EIA report yesterday but it fails to point out that the Opec report for November is better than the Opec report from October.
Specifically, the calculations from the October report suggested that if Opec were to be able to reduce output to 32.5 mbd there would be balance in the oil market in 2017, but now the report suggests, based on the numbers, that demand will exceed supply by 800,000 barrels per day if they're able to cut supply to 32.5 mbd.
In addition, the EIA report suggested that Opec Oil output would be 3.86 mbd but Opec output was actually 3.63 mbd, which was less than what the EIA suggested.
The production increase from Iran has already come and it is already sufficient to allow Iran to at least cap production, and that's all that is needed from Iran at this point.
They have the numbers to cut production by over 1.1 mbd right now, and when we factor in supply increases from OECD the specific number if an agreement to cut production is reached is 1.065 mbd net of those supply increases.
They have the numbers, and those numbers bring them right down to the 32.5 mbd level, a level that would create an undersupply in 2017 and immediate balance in the oil market.
The Opec report today was bullish for price.
iPath S&P GSCI Crude Oil Total Return (NYSEARCA:OIL)
United States Oil Fund LP (ETF) (NYSEARCA:USO)
VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSEARCA:UWTI)
ProShares Ultra DJ-UBS Crude Oil (NYSEARCA:UCO)
Proshares Trust II (NYSEARCA:SCO)