With no signs of any drop in US production, Oil outlook remains soft

Almost all the pointers right now are downward arrows some of which are potentially have quite serious consequences. Last week WTI gained $3 but Friday’s fall meant that Brent was only flat, today both are weaker again. It is not wrong to suggest that a huge amount is riding on the Iran nuclear talks for which the deadline is tomorrow, word has it that Iran has ceded a lot, particularly on stockpiles, in return they are hoping that the sanctions will be lifted in total and with immediate effect. That would clearly have the most effect on the oil market as not only would production start to pick up but word is that they have 30m barrels of crude oil stockpiled for just such an event.

Add that to the significant oversupply worldwide, no sign of US production dropping much and any pick-up in demand in H2 being relatively modest and the outlook remains distinctly soft…Even the rig count on Friday didnt offer much for the bulls, showing as it did a fall of 21 rigs to 1048, of which only 12 were oil taking that number down to 813. Admittedly it is still falling, being almost exactly 50% off the October peak but the decline is slowing, last week was the smallest fall in 15 weeks of figures. Finally, there seems to be little disruption at present due to the Yemeni conflict, it would have to get much more serious to have a material effect on world supplies, but rule nothing out.