The outlook in less than 60 seconds....
Since our last report, the OPEC and non-OPEC's oil production cuts have been implemented and combined compliance is high. Half way through the 6-month period, talks of exension of the deal are set to take place in May. As some oil producers have cut production, U.S. shale oil producers have turned on the oil taps and ramped up production, limiting the effect of the production cut deal. Global demand is likely to increase around the same level as previous years, by around 1 mio. barrels per day.
The U.S. central bank, the Fed, hiked interest rates in March, planning another 2-3 hikes this year as U.S. economy is on track for growth. The European Central Bank, ECB, could refrain from taking additional monetary easing measures and Chinese growth in Q4-16 came out improved.
The geopolitical situation remains fragile. Libyan oil production has been on the rise, but disruptions emerge as pipelines and ports are subject to clashes and sabotage. Recent situation in Syria could escalate the geopolitical risk premium further.