And after all their efforts to balance the oil supply-demand equation, it is unthinkable that OPEC and Russia would then revert to oversupplying the market again in 2018. Further patience will, however, be needed before the investor mind-set changes and sentiment turns positive on the oil market.
That being said, we have now entered a period (the summer months) in which oil demand tends to peak because of the US driving season and Middle Eastern air-conditioning needs. This should translate into fast inventory drawdowns, assuming OPEC/Russia stand firm on their production cuts.
Meanwhile, fears of rapidly growing US shale production seem unwarranted as the sector faces increasing production bottle-necks due to a lack of fracking material.
All told, we remain confident that the market will move into balance within six to nine months, setting the stage for higher oil prices.
(update : 10.07.2017)