Sumitomo Gunma Holdings Says Oil Market Is Set For Supply Strain

TOKYO, Sept. 27, 2017 /PRNewswire/ -- Financial analysts at Sumitomo Gunma Holdings have commented on the oil market as crude oil prices rose sharply following a surge in geopolitical unrest in the middle east and also as markets factored in a possible supply squeeze as early as 2018.

Ever since the early 2016 crash, when oil tumbled to around $26 a barrel and key producers started releasing headlines over output freeze, the Brent price has climbed to trade a shy of the $60 threshold.

Chief analyst at Sumitomo Gunma Holdings, Michael Renjiro who has been extensively covering commodities at the company for over eight years commented, "Five countries in the group -- Libya, Nigeria, Venezuela, Iran and Iraq -- may already be pumping at their maximum capacity this year."

Michael Renjiro added, "Even if this assumption is not true, the same effect would be expected given recent proposals to force limits on these countries' crude production. This probably would be enough to put led-OPEC's efforts to ease the supply glut back on track."

Last week, an OPEC meeting in Vienna was another important factor helping to push prices higher as markets anticipated a decision to extend or even deepen production cuts beyond the first quarter of 2018.

Meanwhile, efforts led by the Organization of the Petroleum Exporting Countries so far have worked to reduce global stockpiles. Still, those reductions have taken place only during summer months, which usually see seasonally low demand. Therefore, the output curbs' effect on prices would be more obvious during high demand cycles when inventories reductions start to influence domestic stockpiles.

Six months later, we may expect a further climb in prices as the idea that the production cut is starting to work, hence the rebalance is under way, will be a more accepted fact. In addition, the renewed OPEC talks of a potential deal extension would force bears to cut bets on falling prices by the most ever.

About: Sumitomo Gunma Holdings provides its corporate and individual clients with an extensive list of services and products related to investment and capital wealth management solutions.

Media Contact: Mr Michael Renijro, michael.renjiro@sghtrading.com, 81345774640.

 

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