The Week In Hindsight, 28 February 2014

Crude output from OPEC nations (Organisation of Petroleum Exporting Countries) increased by 170,000 bpd during February compared with the rate of production seen in December 2013, when OPEC exports fell to a 2 ½ year low.

The increase in supply comes as sanctions relief for Iran begins to take effect while improved production from Iraq is also thought to have contributed to the rise. The news helped to drive Brent Crude from earlier peaks in the $110 P/B region down to $108.

WTI Crude also lost ground over the week as concerns over US data began to bite. The North American benchmark dropped from $103 p/b down below $102 at its lowest point.

Despite the week’s pull back our view surrounding oil prices for 2014 remains unchanged. We continue to expect strong support at or around the current levels throughout Q1 and into Q2. Our expectation is derived from a growth outlook which, at present, remains positive. This is despite the concerns that exist in some segments of the market over the US economy. We believe the sour taste of the current crop in terms of data is, more likely than not, due to the weather.