Last month, we thought the expected crude price rally would begin in January and hit its stride in February, but it got underway in mid-December, sparked by the Forties pipeline shut down, but fed by tighter supply/demand fundamentals. The current runup in prices may have been a little too quick, but even if we see a retrenchment from current highs, crude oil prices will remain strong and can keep the bears, who are focused on shale growth, at bay.
Even as U.S. crude oil production continues to rise, that increase in output, coupled with growth elsewhere will not be enough to yield a surplus and rebuild global crude oil inventories in 2018. The current crude oil market is close to balance with floating storage essentially liquidated and on-land inventories falling. Meanwhile, any supply disruption will encourage a price spike, and Venezuelan production continues to fall.