The widespread notion amongst oil market individuals that oil demand has been disappointing shouldn’t be supported by knowledge.
That’s the view of Commonplace Chartered analysts, in response to a report despatched to Rigzone this week, wherein the analysts stated 2024 oil demand development forecasts from the “key evaluation companies have trended larger in latest months, and backward-looking revisions of precise demand have tended to be larger”.
“This sample continued with the most recent EIA (Vitality Data Administration) PSM, printed on January 31,” the analysts acknowledged within the report.
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“Whole November U.S. oil demand was revised larger by 910,000 barrels per day to twenty.71 million barrels per day, taking the yr on yr improve to 2.45 p.c from the preliminary estimate of a 2.05 p.c decline,” they added.
The analysts additionally identified that gasoline demand was revised 255,000 barrels per day larger to eight.845 million barrels per day, noting that this can be a yr on yr improve of 0.21 p.c versus the preliminary estimate, primarily based on weekly knowledge, of a 2.7 p.c decline. Gasoline demand has been revised larger in every of the previous 5 months, with a mean revision of 247,000 barrels per day, the analysts stated within the report.
“The newest massive upward U.S. revision takes our estimate of November 2023 international oil demand to 102.08 million barrels per day, making it solely the third month ever wherein demand has exceeded 102 million barrels per day,” the Commonplace Chartered analysts acknowledged within the report.
“We additionally anticipate last knowledge for December 2023 and February-March 2024 to point out demand surpassing 102 million barrels per day, lifting the tally to 6 months, regardless of comparatively gentle winter situations in some key consuming areas,” they added.
“We estimate that the yr on yr improve in November was a robust 2.41 million barrels per day. Additional, yr on yr development of two.30 million barrels per day in This fall-2023 exceeded the 1.92 million barrel per day yr on yr development for 2023 as entire, suggesting {that a} broadly mentioned This fall demand slowdown could have been an phantasm primarily based on partial and unrevised knowledge,” the analysts went on to state.
Oil demand knowledge could also be proving robust and U.S. crude oil provide may disappoint, however as of now, market sentiment stays resolutely bearish, the Commonplace Chartered analysts famous within the report.
“A rising variety of merchants seem to assume that present costs beneath $80 per barrel and 30-day realized annualized volatility of simply 25 p.c are too low given fundamentals and geopolitical dangers,” the analysts added.
“Nevertheless, these merchants are largely on the sidelines in the meanwhile. We nonetheless see value threat as closely skewed to the upside, however sustained momentum larger has proved elusive,” they continued.
Within the report, the analysts highlighted that SCORPIO, Commonplace Chartered’s machine-learning oil value mannequin, signifies per week on week fall of $0.31 per barrel to settlement on February 12.
In a analysis be aware despatched to Rigzone on January 29, analysts at J.P. Morgan stated their view stays that oil demand development will sluggish from “a really robust 1.8 million barrels per day in 2023 to a nonetheless robust 1.5 million barrels per day in 2024, underpinned by a moderating however nonetheless resilient international financial growth and remaining pent-up oil demand”.
“Incoming macro knowledge level in direction of a wholesome international economic system and excessive frequency oil demand indicators for January are coming a contact stronger than seasonality would counsel,” the J.P Morgan analysts acknowledged within the be aware.
provide, the analysts stated within the be aware that producers exterior of the OPEC+ alliance ought to drive total development, “projected at 1.6 million barrels per day, matching development in demand”.
“Whereas spectacular, it’s considerably beneath the two.4 million barrel per day achieve averaged final yr, and mixed with our optimistic view on demand, ought to give Saudi Arabia and Russia optionality to both proceed to constrain manufacturing or unwind a number of the voluntary cuts,” they added.
“All of this implies a largely balanced market with Brent shifting from the mid $70s in January to the low $80s by March and excessive $80s by Might, earlier than leveling off within the last quarter of the yr,” they continued.
Within the analysis be aware, the J.P. Morgan analysts stated the largest pushback towards their view “has not been the balanced supply-demand outlook, however whether or not a balanced market is certainly value $80”.
“A 2024 market the place oil provide development is adequate to cowl development in demand is without doubt one of the the explanation why buyers at the moment understand oil to be an unattractive funding alternative,” the analysts acknowledged within the be aware.
“This notion is a marked turnaround from even a yr in the past, when the consensus view was that given the capital self-discipline and years of underinvestment within the U.S. and different non-OPEC oil provide, OPEC and its allies had a agency grip in the marketplace,” they added.
“Certainly, assuming constrained non-OPEC output and taking a look at situations of balanced markets pre-shale-revolution in 2013, a balanced market was value $90+. Nevertheless, in a regime of plentiful non-OPEC provides post-2013, throughout the latest examples of balanced markets in 2016 and 2019, Brent oil costs averaged $45 and $64, respectively,” they continued.
“For 2024 we assume provides exterior of the OPEC+ coalition are adequate to cowl international oil demand, but, our pricing mannequin reveals the Brent oil value averaging $83 this yr,” the analysts went on to state.
To contact the creator, electronic mail andreas.exarheas@rigzone.com
