TOKYO, May 24, 2018 /PRNewswire/ - Akita Matsui Trading research department have noted that the five-year forward price for oil futures is on the rise after a period of stability. At the same time, the price of spot oil has moved above the 5-year forward price.
The Brent forward price averaged $63 a barrel last week, outpacing the gains in spot prices, thanks to supply concerns and an OPEC-led deal to limit production, according to fresh industry projections.
Max Harrington, Head of Corporate Equities at Akita Matsui Trading wrote in a note to investors: "The balance between strong production growth outside OPEC, on the one hand, and continued restraint by major producers, on the other, remains the key factor on the supply side."
"With the spot price having now moved above the five-year forward price, one could conclude that a trend change is under way," he added.
Better prospects for economic growth in Asia would fuel strong demand for oil until at least 2023, the survey showed. Key economists at Akita Matsui Trading are forecasting that global oil demand will increase by 7 million bpd during the same period to nearly 105 million bpd.
Edward Cohn, Director of Investor Services at Akita Matsui Trading, said, "Even if producers' compliance remains elevated over the upcoming years, the explosive growth in U.S. shale oil output accompanied by growth in its export capacity are able to hurt the balance towards weaker prices in the month ahead."
However, doubts over the future of compliance with the output cut deal and rising U.S. production could stem the upward momentum. This would take the world's biggest consumer past top exporter Saudi Arabia and within reach of biggest producer Russia.
Elsewhere, investors are now expecting that oil prices will be pushed up by fears of the extended stand-off between the United States and several key producers such as Iran and Venezuela, which would definitely hurt its oil exports.
SOURCE Akita Matsui Trading