Oil bears may have seen their shadows signaling at least 6 more months of a bull oil market. Or is it 6 years? Even with reports of U.S. oil production driving over 10 million barrels of oil a day, the decline in global oil stockpile continues to support the market. OPEC compliance to its production cuts are at a whopping 129% even as their production rose slightly. This compliance shows great restraint by producers that in other times may have been tempted to cheat or at least look to pick up for plunging production in the collapsing socialist state Venezuela. Even with shales best efforts to increase output, the realities are settling in with oil bears that they cannot match OPEC cuts barrel for barrel, nor can they keep up with surging global demand.

Global oil demand is blowing away expectations as we had predicted. According to the EIA, global oil  demand increased to 98.38 million barrels a day in 2017 up from around 92 million barrels of oil a day in 2015. There was higher consumption from the U.S. and China and Europe and we feel that we will add another 2 million barrels of oil consumption in 2018.

The ongoing impact of the Trump tax cuts will increase demand globally. The historic jump in stock prices after President Trumps election in anticipation of less regulation on small businesses caused a rally that is still making oil look cheap on a historic basis.

Even Goldman Sachs is seeing what the Energy Report has been writing for months and that is that the global oil market is in a deficit situation. Goldman says that the global oil market was in a 1.1 million barrel a day deficit in in the fourth quarter of 2017.

That caused oil stocks, the major Organization for Economic Co-operation and Development (OECD) in-country stocks, to fall by a massive 105 million barrels. That puts December stocks only 0.7% above the average with above average demand. Inventory data for the U.S., Japan, European ports and Singapore point to even further declines in inventories, currently 1% below their 5-year average.