It’s hard to break those addictions. You see abnormally low oil prices are like crack to an economy. Economies start to get hooked on cheap oil and then want more. Then they get addicted to oil and then they continue to buy at any price because once they get hooked they can’t get enough. We saw that in the bottom of the oil cycle back in 1999 and we are seeing it once again.

This period of abnormally low oil prices is raising global oil demand estimates and igniting global economic growth. The International Monetary Fund (IMF) raised forecast for projected global economic growth of 3.6 percent this year and 3.7 percent for 2018. 

That rise in growth means that global oil demand growth should see another increase in demand that already has grown by at least 2.3 million barrels per day (mb/d), or 2.4 percent, in the second quarter of 2017 according to data from the International Energy Agency last month the strongest growth in two years. That growth number may be even higher as the IEA traditionally underestimates demand.

We Get the OPEC demand report soon and we expect based on comments that their demand estimates will rise.  Now with OPEC set to extend production cuts the drawdown in global oil supply will continue. The cartel is reaching out to shale producers to show restraint until they can get the supply situation back in order. Yet it may not be OPEC that gets shale oil producers to show restraint as shale investors are getting smarter about where to put their money, Major players are starting to reward shale firms that can show profits and good balance sheets instead of just the ability to produce barrels.  With the U.S. rig count slowing and a move towards well head profitability the shale oil players won’t be able to replace OPEC barrels and surging global demand.

We also will get the American Petroleum Institute Report tonight and we should see crude supply fall. With Brent crude trading at a huge spread to the WTI contract, why would you put it in storage if you could find a ship and deliver it overseas. U.S. production in the Gulf of Mexico is not all the way back. The BSEE reported that 58 percent of oil production is still offline or about 1.024 million barrels of oil per day. About half of natural gas production remains offline in the Gulf of Mexico.