Even as oil supply may rebound this week the tightening global oil supply is becoming more apparent. Global demand fed by low prices and OPEC compliance has seen the global overhang of oil practically disappear. We saw more support from geopolitical issues as Libya declared a force majeure after an attack at its southeastern oil field Al-Fil.

We also saw support in comments by Saudi Arabian oil minister Khalid al-Falih, who said that they would keep crude production in between January through March at less than 7 million barrels a day, which is well below their OPEC quota. As Warren Buffet warns about company’s stock prices that have debt, as in many shale oil producers, the capital to ramp up shale may be limited in the near term. We should see shale output start to level off as costs rise and banks become stingier.

As we predicted long ago that demand would overtake production as major players cut spending too deep and now we are behind the curve when it comes to production versus demand growth, the oldest story in the commodity cycle handbook.

The market is strong even as we should see a combination of a jump in U.S. imports and lower refinery runs that could lead to a boost in U.S. crude supply. Imports may get a boost as ships are trying to make it through the weather challenged Houston Shipping Channel. Crude supply could build in the U.S. by 3 million barrels even as Cushing Oklahoma falls again by 1.5 million barrels. Distillates should fall by 1 million and gasoline should rise by 2 million barrels.

Yet in Europe, we should see more draws as a last blast of winter is forcing European refiners to put off maintenance to meet demand. That should open the export window for U.S. products again and should give both RBOB and Ultra Low sulfur diesel support.

Venezuelan President Nicolas Maduro bragged on Saturday that he would recover 70 percent of the country’s lost oil production in the first half of 2018. Maybe that cryptocurrency thing is working for him. Of course, it remains to be seen if his pollical cronies have the talent to raise production even if they had the cash. It is so sad to see the Venezuelan people get robbed of their future from this evil regime.