Michael D. Cohen at Barclays makes the bearish case here:
“Two key points are important to note. First, the supports mentioned above may not be sustained. Though Barclays Research economists do not expect a recession in 2018, they do expect China’s growth to slow, which would exert disproportionate pressure on commodities demand.
And not everyone is covered by the OPEC/non-OPEC deal. Libya and Nigeria’s output, though fragile, has the potential to surge 10-20 percent higher, despite high risk of production. The output that was offline in Canada is returning, boosting supplies next year and in 2019. The same goes for Brazil, where new supply is ramping quickly. Demand growth can also vary widely, especially if retail prices are higher on the year.
Second, the past year has shown that prices are determined by the speed and direction of inventories. Barclays Commodities Research’s balance indicates a return to surplus on average next year.
We expect historically high demand growth of 1.6 million barrels per day. However, that is more than offset by almost 500,000 barrels per day of new non-OPEC non-US supplies, at least 1.2 million barrels per day of U.S. supply, and some other volumes. Clearly, the market will be in a small deficit during some of 2018, but to sustain current price levels for all of next year, it must tighten further than our balance suggests.”
Here is the link: https://www.cnbc.com/2017/12/27/why-oil-is-due-for-a-sharp-correction-barclays-commentary.html
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