Crude oil has been in the spotlight of late, with expectations of a production cut from OPEC+ (which is the Organisation of the Petroleum Exporting Countries [OPEC] plus the inclusion of non-members such as Russia, Mexico and Kazakhstan, among others) bringing the possibility of a bottom for a market that has spent much of the past two months in decline. However, while we did see a production cut, the outcome has been somewhat muted, raising questions over whether this will really be enough to reverse the fortunes of crude.
While we have been seeing big declines of late, last week saw volatility in both directions. This came despite an unexpected drawdown in crude inventories. Recent predictions for 2019 from both the Energy Information Administration (EIA) and OPEC have alluded to a potential oversupply in crude, raising expectations of a drastic rise in inventories. The EIA chart below highlights as much, with the first half (H1) of 2019 expected to see crude stocks increase as supply outstrips demand.