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Crude Oil: The Fundamentals Are Improving – $Oil $UNG $DWTI $UWTI

By Albert Alfonso

As for bright spots, there were two big ones. US oil production, the number I watch the most closely, fell by 31,000 bpd to 8.98 million bpd. We’re finally below 9.0 million bpd. . . .

In other words, oil production has fallen at least 500,000 bpd from the highs in the US. The low price of oil is starting to greatly impact producers. This is a major positive as it means the market is finally rebalancing. This is also a reason why imports are rising.

The other major bright spot is refiner demand for oil, which is being driven by massive gasoline consumption growth. . . .


To summarize, this report was a good one for crude oil fundamentals. The US is clearly seeing lower and lower oil production. This is great news for producers. While prices will likely remain volatile, eventually the lost production will need to be replaced.

The media will likely focus on the headline large crude oil inventory build, so sentiment will sour a bit. Though, it appears that the worst of the bear market is over. Rebalancing has started and will be hard to stop. As shown, most of the oil majors (Exxon Mobil (NYSE:XOM) Chevron (NYSE:CVX) BP (NYSE:BP) Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) ConocoPhillips (NYSE:COP)) have bounced off their YTD lows quite nicely.


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