Oil prices up on demand and inventory data

Oil prices moved higher throughout the week, finding support around their 200-day moving average.

Oil prices moved higher this week, following weakness the week before, as oil prices found support around its 200-day moving average.

 

Pushing prices higher was a monthly report by OPEC which raised the group’s demand forecast by 230,000 bpd to 33 million bpd. This was the third consecutive month OPEC raised their 2018 demand forecast.

 

The report also pointed to declining oil inventories as a result of the current production cap agreement in which OPEC members have cut 1.2 million bpd in production, with another 600,000 bpd in production being cut by non-OPEC members (most notably Russia).

 

The latest OPEC production data estimated that member compliance to the production agreement was solid at ~98%. Markets will continue looking for hints as to OPEC’s intention to end or possibly continue their production agreement beyond March 2018.


“In the short-term, news regarding a potential extension of the OPEC production agreement and US production data are likely to continue to drive oil markets.”

 

Over the long-term, we expect oil prices to remain near their current levels as an acceleration in US supply should keep pressure on oil prices. Our 12-month price target for oil is US$50/barrel (WTI).

 

Gold prices fell slightly this week as the minutes released by the Federal Reserve further signaled the Fed’s intention to continue on its path of policy normalization and raise rates at its December FOMC meeting. Our 12-month price target for Gold is US$1300.



WTI oil prices and their 200-day moving average

Source: Thomson Reuters, Deutsche Bank Wealth Management. Data as of October 10, 2017.

Markus Müller
Global Head
CIO Office
Source: CIO Bulletin, October 13, 2017