OPEC Will Lose Its Battle of Algiers
Yesterday’s near-record crude inventory draw is a big downpayment on normalization of inventories in the face of reduced production and growing demand. We think there is a good chance that OPEC and Russia will agree to a production freeze later this month in Algiers, but it will be of little actual consequence. OPEC is running out of spare capacity anyway, until it can commit time and scarce money to mega-projects that will bring new resources into play. With or without a freeze, oil prices will continue to rise and continue to incentivize the rebirth of activity in the US. We reiterate our call for $65 oil by year-end.