Oil Price Fundamentals - Are We Getting Ahead of Ourselves?

After Brent's recent surge to above $60/bbl, the market appears to have taken at face value recent rhetoric from key Saudi officials indicating enthusiasm to extend the OPEC-led output deal all the way through the end of next year. But has the market overdone it? Signs have emerged recently that a more piecemeal approach is gaining traction among the parties to the deal and that they may seek to avoid painting themselves into a corner with a "hard" extension. But the rather zealous market expectations make the oil price vulnerable to a setback - and the looming November 30 OPEC meeting could provide just that. Meanwhile, global supply is set to overtake demand again in 1H18. We believe Brent will eventually find fundamental equilibrium at around $55/bbl next year. As for the longer-term outlook, stay tuned for a follow-up to this report later this week or early next week.