balances (here)

English translation: supply/demand balances (supply constricted relative to demand)

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
English term or phrase:balances (here)
English translation:supply/demand balances (supply constricted relative to demand)
Entered by: Charles Davis

23:54 May 14, 2018
English to English translations [PRO]
Bus/Financial - Finance (general)
English term or phrase: balances (here)
OPEC’s response to the tightening of the oil market will be critical in determining just how constricted balances become.

I have a hard time trying to understand the meaning of "how constricted balances become".

Any help is greatly appreciated!
Laura Vinti
United States
Local time: 13:19
supply/demand balances (supply constricted relative to demand)
Explanation:
I don't think the sense of "balances" is financial here. I believe that in this context it refers to the relationship between supply and demand in the oil market. A tightening or constriction of balances means a restriction of supply compared to demand. To say that the oil market is tightening means that supply is relatively restricted relative to demand, which of course pushes prices up. This has been happening for several reasons: economic growth, cold weather and cuts in production (particularly in Venezuela). The price could rise as high as $80 a barrel. The US withdrawal from the nuclear deal with Iran will further tighten (supply/demand) balances because it will reduce supply: Iranian exports will be cut. So how constricted these balances become will depend on how OPEC (and Russian) respond: whether and how much they increase production to compensate.

The following is from January this year, before the Iran news:

"“We have updated our supply/demand balances to reflect a faster-than-expected tightening in the global oil market due to improving cyclical conditions, cold winter weather, and higher than expected OPEC compliance,” Bank of America Merrill Lynch said.
[OPEC compliance means OPEC countries' compliance with production cuts.]
In an effort to tighten markets and prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) and Russia started to withhold production in January last year, and the cuts are set to last through 2018."
https://www.reuters.com/article/global-oil/oil-markets-near-...

So tighter oil balances means higher demand relative to supply (or lower supply relative to demand):

"Global production and consumption are both projected to increase through 2018, but consumption is expected to increase at a faster rate than production. As a result, global balances are expected to tighten."
https://www.eia.gov/todayinenergy/detail.php?id=29672

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Note added at 51 mins (2018-05-15 00:46:27 GMT)
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"Tight balances will support crude prices": because if the balances are tight it means that supply is restricted relative to demand, and in that situation prices rise.

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Note added at 1 hr (2018-05-15 01:05:29 GMT)
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There are a number of documents that show that the term "oil balances" refers to the balance between supply and demand. For example:

"Over the last few months, the oil market has remained fixated on global oil supply. There have been several debates on OPEC vs Shale and the duration of OPEC production cuts.
However, global oil demand continues to receive very little attention despite it being the other half of global oil balances."
https://seekingalpha.com/article/4058092-global-oil-demand-g...
Selected response from:

Charles Davis
Spain
Local time: 19:19
Grading comment
This was very helpful!! Thank you!
4 KudoZ points were awarded for this answer



Summary of answers provided
4 +3supply/demand balances (supply constricted relative to demand)
Charles Davis
4current account balances
David Hollywood


Discussion entries: 2





  

Answers


50 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +3
supply/demand balances (supply constricted relative to demand)


Explanation:
I don't think the sense of "balances" is financial here. I believe that in this context it refers to the relationship between supply and demand in the oil market. A tightening or constriction of balances means a restriction of supply compared to demand. To say that the oil market is tightening means that supply is relatively restricted relative to demand, which of course pushes prices up. This has been happening for several reasons: economic growth, cold weather and cuts in production (particularly in Venezuela). The price could rise as high as $80 a barrel. The US withdrawal from the nuclear deal with Iran will further tighten (supply/demand) balances because it will reduce supply: Iranian exports will be cut. So how constricted these balances become will depend on how OPEC (and Russian) respond: whether and how much they increase production to compensate.

The following is from January this year, before the Iran news:

"“We have updated our supply/demand balances to reflect a faster-than-expected tightening in the global oil market due to improving cyclical conditions, cold winter weather, and higher than expected OPEC compliance,” Bank of America Merrill Lynch said.
[OPEC compliance means OPEC countries' compliance with production cuts.]
In an effort to tighten markets and prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) and Russia started to withhold production in January last year, and the cuts are set to last through 2018."
https://www.reuters.com/article/global-oil/oil-markets-near-...

So tighter oil balances means higher demand relative to supply (or lower supply relative to demand):

"Global production and consumption are both projected to increase through 2018, but consumption is expected to increase at a faster rate than production. As a result, global balances are expected to tighten."
https://www.eia.gov/todayinenergy/detail.php?id=29672

--------------------------------------------------
Note added at 51 mins (2018-05-15 00:46:27 GMT)
--------------------------------------------------

"Tight balances will support crude prices": because if the balances are tight it means that supply is restricted relative to demand, and in that situation prices rise.

--------------------------------------------------
Note added at 1 hr (2018-05-15 01:05:29 GMT)
--------------------------------------------------

There are a number of documents that show that the term "oil balances" refers to the balance between supply and demand. For example:

"Over the last few months, the oil market has remained fixated on global oil supply. There have been several debates on OPEC vs Shale and the duration of OPEC production cuts.
However, global oil demand continues to receive very little attention despite it being the other half of global oil balances."
https://seekingalpha.com/article/4058092-global-oil-demand-g...

Charles Davis
Spain
Local time: 19:19
Native speaker of: Native in EnglishEnglish
PRO pts in category: 82
Grading comment
This was very helpful!! Thank you!

Peer comments on this answer (and responses from the answerer)
agree  Yvonne Gallagher: yes, this seems clear from reading the article.
8 hrs
  -> Thanks, Yvonne :-) That was my understanding, though finance is not my thing.

agree  Murat Söker: Charles explained very well. This is the point. balance means here: tightening conditions of oil supply. (not demand)
1 day 10 hrs
  -> Thank you, Murat!

agree  Charlesp
1 day 15 hrs
  -> Thanks, Charles :-)
Login to enter a peer comment (or grade)

5 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5
current account balances


Explanation:
I would say

https://www.opec.org/opec_web/static_files_project/media/......
Table 2.6 Current account balances in OPEC Members. 19. Table 2.7 Annual average exchange rates for OPEC Members. 20. Section 3: Oil data: upstream. 21.

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Note added at 5 mins (2018-05-15 00:00:38 GMT)
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context is a bit vague and this could also refer to overall balances

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Note added at 6 mins (2018-05-15 00:01:24 GMT)
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but basically it refers to OPEC balances

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Note added at 8 mins (2018-05-15 00:03:16 GMT)
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could be "trade balances" and more likely but your context will make this clear

https://books.google.com.ar/books?id=2bbFBf1gByUC - Traducir esta página
1981 - ‎Foreign exchange rates
EFFECTS OF A HYPOTHETICAL 100 PERCENT OPEC PRICE INCREASE ON TRADE BALANCES WITH OPEC (Billions of dollars) Forecast Based on Forecast ...

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Note added at 10 mins (2018-05-15 00:04:57 GMT)
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"constricted" in the sense of "tight"

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Note added at 18 mins (2018-05-15 00:13:17 GMT)
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in light of more context, it means to what extent this lower Venezuelan output will limit "balances" (probably referring to trade balances)

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Note added at 3 hrs (2018-05-15 03:18:20 GMT)
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ok and good luck ...


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Note added at 3 hrs (2018-05-15 03:18:45 GMT)
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time for bed :)

David Hollywood
Local time: 14:19
Works in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 40
Notes to answerer
Asker: The tightening is due mainly to the drop in Venezuelan output, plus other cuts to/declines in exports

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