Analys
Still upside to crude oil spot prices into Q2-17 but softer again in H2-17

We expect front month Brent crude to head higher in Q2-17 to average $57.5/b but to toutch above $60/b at times.
Refineries will move back into operation consuming more oil. OPEC is delivering on cuts and inventories will decline.
US crude production is now growing (marginally, annualized) as fast as it did between 2012 and May 2015.
We expect OPEC to end cuts after H1-17 as mission is accomplished: Inventories are steady or declining and spot crude oil prices are equal to or higher than longer dated contracts. Not much more OPEC can do.
We expect the front month Brent crude oil price to fall back in H2-17 in the face of strongly rising US shale oil production and reviving OPEC production.
Brent crude front month price to average $52.5/b in Q4-17 toutching $50/b at times.
Higher than expected US shale oil rig additions since the start of the year has softening our projected deficit in 2019. However, we still see a substantial inventory draw below normal in 2019.
From the news flow:
Exxon will use 50% of its drilling budget for 2017 on US onshore drilling with its production there growing 20% pa to 2025
Libya’s crude oil production falls back again as clashes re-erupt
IEA: OPEC will increase its production capacity by 2 mb/d from 2016 to 2022 with Iraq lifting production to 5.4 mb/d in 2022
Ch1: Global refinery maintenance increased strongly in Q1-17 – Refineries soon to resume activity
A large increase in global refinery maintenance in Q1-17 left a comparble volume to be stored rather than processed
Ch2: Weekly inventories have rissen strongly in Q1-17 – Soon to decline.
OPEC also produced at record high level in Nov and Dec which has hit the market in Q1-17 along with several months of natural lag in the supply chain between production and consumption. Both helping to drive weekly inventory data up strongly in Q1-17
Ch3: OPEC delivers on cuts.
OPEC is delivering on its promises to cut. So when refineries move back on-line after maintenance and we also have the Nov and Dec OPEC production blob cleared out the the market we will see inventories starting to decline in Q2-17.
Ch4: Crude oil forward curve soon to move fully into backwardation
The forward crude curves will then move fully into backwardation with also the very front end of the curve (which is still in contango) moving into backwardation.
This is likely to lead front end Brent crude oil price up towards the $60/b mark with our expectation for an average Brent 1mth price of $57.5/b during Q2-17 touching $60/b at times.
Ch5: Speculators are bullish awaiting that last move into full backwardation
And speculators are bullish accordingly – close to record high net long speculative position in WTI
Ch6: US oil rig count moves higher and higher and higher
But US oil rigs are constantly added to the market and at a higher rate than we had expected.
Ch7: More US shale oil rigs have been activated versus what we had expected
More shale oil rigs have been added into activity in the US shale oil space versus what we had expected
Ch8: Helping to shift US crude oil production growth back into full pre-2015 growth level again
US crude oil production is now on rising trend again adding on average 30 kb/d w/w since the start of the year.
That is equal to a marginal, annualized growth rate of 30 kb/d/week * 52 week = 1560 kb/d/year (1.5 mb/d marginal, annualized growth rate).
That is back to the growth rate seen between 2012 to June 2015.
Ch9: More shale oil rigs than expected means higher forecasted US crude oil production than expected
This impacts our projected US crude oil production for 2017, 2018 and 2019 lifting it higher
Ch10: With US crude oil production now expected to lift to close to 13 mb/d at the end of 2019
Ch11: Global supply/demand balance still in deficit next three years but not much deficit in 2018 any more
Almost constantly weakening and softening our projected supply/demand balance for the nearest three years.
With our view now that there will be almost no deficit in 2018.
But still a solid deficit and inventory draw coming in 2019 as cuts in investments in conventional supply since 2014 starts to hit the market.
Little conventional legacy investments to add additional supply in 2019 and thus little to counter natural declines in existing conventional production in 2019.
Ch12: End of year OECD inventories to draw substantially below normal in 2019
End of year OECD stocks still to draw substantially below a normal of 2700 million barrels in 2019.
But stocks are likely to end the year above normal for both 2017 and 2018.
Thus few pressure points in the global supply/demand balance during 2017 and 2018 as current elevated oil inventories provides a nice cushion
Ch13: End of year OECD inventories to stand some 200 mb below normal in December 2019
The year 2019 still looks like the year when things could happen to the oil price on the upside.
As end of year OECD inventories could draw down some 200 million barrels below normal
Unless of course demand growth weakens, US shale oil production accelerates even more or oil companies accelerate in-field drilling thus countering conventional declines.
Ch14: Projected call on OPEC has declined since the start of February along with higher US crude oil production projections
As we steadily adjust our US crude oil production higher for 2017, 2018 and 2019 along with higher than expected additions of US shale oil rigs
The need for oil from OPEC declines comparably for the years to come
How far down is OPEC willing to let it slide? Probably not below 33 mb/d for 2018.
Ch15: Softer supply/demand balance naturally means softer prices
In a dynamic crude oil price forecasting frame the forecasted crude oil price declines along with with a softening forward looking supply/demand balance
(Prices in graph are mathematically extended from the $80/b forecasted at the start of February and are not new price forecast assessments)
Ch16: Longer dated market prices have deteriorated since the start of the year
Longer dated contracts like Brent crude December 2020 have deteriorated since the start of the year
Probably reflecting the acceleration in US shale oil rig additions in Q1-17
In late February the contract traded at its lowest level since April 2016.
Kind regards
Bjarne Schieldrop
Chief analyst, Commodities
SEB Markets
Merchant Banking
Analys
Tightening fundamentals – bullish inventories from DOE

The latest weekly report from the US DOE showed a substantial drawdown across key petroleum categories, adding more upside potential to the fundamental picture.

Commercial crude inventories (excl. SPR) fell by 5.8 million barrels, bringing total inventories down to 415.1 million barrels. Now sitting 11% below the five-year seasonal norm and placed in the lowest 2015-2022 range (see picture below).
Product inventories also tightened further last week. Gasoline inventories declined by 2.1 million barrels, with reductions seen in both finished gasoline and blending components. Current gasoline levels are about 3% below the five-year average for this time of year.
Among products, the most notable move came in diesel, where inventories dropped by almost 4.1 million barrels, deepening the deficit to around 20% below seasonal norms – continuing to underscore the persistent supply tightness in diesel markets.
The only area of inventory growth was in propane/propylene, which posted a significant 5.1-million-barrel build and now stands 9% above the five-year average.
Total commercial petroleum inventories (crude plus refined products) declined by 4.2 million barrels on the week, reinforcing the overall tightening of US crude and products.


Analys
Bombs to ”ceasefire” in hours – Brent below $70

A classic case of “buy the rumor, sell the news” played out in oil markets, as Brent crude has dropped sharply – down nearly USD 10 per barrel since yesterday evening – following Iran’s retaliatory strike on a U.S. air base in Qatar. The immediate reaction was: “That was it?” The strike followed a carefully calibrated, non-escalatory playbook, avoiding direct threats to energy infrastructure or disruption of shipping through the Strait of Hormuz – thus calming worst-case fears.

After Monday morning’s sharp spike to USD 81.4 per barrel, triggered by the U.S. bombing of Iranian nuclear facilities, oil prices drifted sideways in anticipation of a potential Iranian response. That response came with advance warning and caused limited physical damage. Early this morning, both the U.S. President and Iranian state media announced a ceasefire, effectively placing a lid on the immediate conflict risk – at least for now.
As a result, Brent crude has now fallen by a total of USD 12 from Monday’s peak, currently trading around USD 69 per barrel.
Looking beyond geopolitics, the market will now shift its focus to the upcoming OPEC+ meeting in early July. Saudi Arabia’s decision to increase output earlier this year – despite falling prices – has drawn renewed attention considering recent developments. Some suggest this was a response to U.S. pressure to offset potential Iranian supply losses.
However, consensus is that the move was driven more by internal OPEC+ dynamics. After years of curbing production to support prices, Riyadh had grown frustrated with quota-busting by several members (notably Kazakhstan). With Saudi Arabia cutting up to 2 million barrels per day – roughly 2% of global supply – returns were diminishing, and the risk of losing market share was rising. The production increase is widely seen as an effort to reassert leadership and restore discipline within the group.
That said, the FT recently stated that, the Saudis remain wary of past missteps. In 2018, Riyadh ramped up output at Trump’s request ahead of Iran sanctions, only to see prices collapse when the U.S. granted broad waivers – triggering oversupply. Officials have reportedly made it clear they don’t intend to repeat that mistake.
The recent visit by President Trump to Saudi Arabia, which included agreements on AI, defense, and nuclear cooperation, suggests a broader strategic alignment. This has fueled speculation about a quiet “pump-for-politics” deal behind recent production moves.
Looking ahead, oil prices have now retraced the entire rally sparked by the June 13 Israel–Iran escalation. This retreat provides more political and policy space for both the U.S. and Saudi Arabia. Specifically, it makes it easier for Riyadh to scale back its three recent production hikes of 411,000 barrels each, potentially returning to more moderate increases of 137,000 barrels for August and September.
In short: with no major loss of Iranian supply to the market, OPEC+ – led by Saudi Arabia – no longer needs to compensate for a disruption that hasn’t materialized, especially not to please the U.S. at the cost of its own market strategy. As the Saudis themselves have signaled, they are unlikely to repeat previous mistakes.
Conclusion: With Brent now in the high USD 60s, buying oil looks fundamentally justified. The geopolitical premium has deflated, but tensions between Israel and Iran remain unresolved – and the risk of missteps and renewed escalation still lingers. In fact, even this morning, reports have emerged of renewed missile fire despite the declared “truce.” The path forward may be calmer – but it is far from stable.
Analys
A muted price reaction. Market looks relaxed, but it is still on edge waiting for what Iran will do

Brent crossed the 80-line this morning but quickly fell back assigning limited probability for Iran choosing to close the Strait of Hormuz. Brent traded in a range of USD 70.56 – 79.04/b last week as the market fluctuated between ”Iran wants a deal” and ”US is about to attack Iran”. At the end of the week though, Donald Trump managed to convince markets (and probably also Iran) that he would make a decision within two weeks. I.e. no imminent attack. Previously when when he has talked about ”making a decision within two weeks” he has often ended up doing nothing in the end. The oil market relaxed as a result and the week ended at USD 77.01/b which is just USD 6/b above the year to date average of USD 71/b.

Brent jumped to USD 81.4/b this morning, the highest since mid-January, but then quickly fell back to a current price of USD 78.2/b which is only up 1.5% versus the close on Friday. As such the market is pricing a fairly low probability that Iran will actually close the Strait of Hormuz. Probably because it will hurt Iranian oil exports as well as the global oil market.
It was however all smoke and mirrors. Deception. The US attacked Iran on Saturday. The attack involved 125 warplanes, submarines and surface warships and 14 bunker buster bombs were dropped on Iranian nuclear sites including Fordow, Natanz and Isfahan. In response the Iranian Parliament voted in support of closing the Strait of Hormuz where some 17 mb of crude and products is transported to the global market every day plus significant volumes of LNG. This is however merely an advise to the Supreme leader Ayatollah Ali Khamenei and the Supreme National Security Council which sits with the final and actual decision.
No supply of oil is lost yet. It is about the risk of Iran closing the Strait of Hormuz or not. So far not a single drop of oil supply has been lost to the global market. The price at the moment is all about the assessed risk of loss of supply. Will Iran choose to choke of the Strait of Hormuz or not? That is the big question. It would be painful for US consumers, for Donald Trump’s voter base, for the global economy but also for Iran and its population which relies on oil exports and income from selling oil out of that Strait as well. As such it is not a no-brainer choice for Iran to close the Strait for oil exports. And looking at the il price this morning it is clear that the oil market doesn’t assign a very high probability of it happening. It is however probably well within the capability of Iran to close the Strait off with rockets, mines, air-drones and possibly sea-drones. Just look at how Ukraine has been able to control and damage the Russian Black Sea fleet.
What to do about the highly enriched uranium which has gone missing? While the US and Israel can celebrate their destruction of Iranian nuclear facilities they are also scratching their heads over what to do with the lost Iranian nuclear material. Iran had 408 kg of highly enriched uranium (IAEA). Almost weapons grade. Enough for some 10 nuclear warheads. It seems to have been transported out of Fordow before the attack this weekend.
The market is still on edge. USD 80-something/b seems sensible while we wait. The oil market reaction to this weekend’s events is very muted so far. The market is still on edge awaiting what Iran will do. Because Iran will do something. But what and when? An oil price of 80-something seems like a sensible level until something do happen.
-
Nyheter3 veckor sedan
Stor uppsida i Lappland Guldprospekterings aktie enligt analys
-
Nyheter4 veckor sedan
Brookfield ska bygga ett AI-datacenter på hela 750 MW i Strängnäs
-
Nyheter4 veckor sedan
Sommaren inleds med sol och varierande elpriser
-
Nyheter3 veckor sedan
Silverpriset släpar efter guldets utveckling, har mer uppsida
-
Analys4 veckor sedan
Brent needs to fall to USD 58/b to make cheating unprofitable for Kazakhstan
-
Nyheter4 veckor sedan
Tradingfirman XTX Markets bygger datacenter i finska Kajana för 1 miljard euro
-
Nyheter2 veckor sedan
Uppgången i oljepriset planade ut under helgen
-
Nyheter2 veckor sedan
Låga elpriser i sommar – men mellersta Sverige får en ökning