In a brand new report despatched to Rigzone, Macquarie strategists Vikas Dwivedi and Walt Chancellor introduced that they continue to be “short-term bullish however structurally bearish” on the oil market after final weekend’s OPEC+ assembly.
“We proceed to consider the massive, 3.5 to 4.0 million barrel per day enhance in refinery runs, extra-seasonal ME energy burn, and OPEC+ cuts will tighten direct crude balances by 3Q23,” the analysts said within the report.
“From there, we anticipate a correction in 4Q23 and 2024 attributable to candy manufacturing development from the U.S. and N. Sea, OPEC+ non-compliance, and slowing demand attributable to recessionary results,” they added.
“In our view, the structural problem for the oil market is the convenience of oil manufacturing development, a function we consider will persist for a number of years,” the analysts continued.
Within the report, the Macquarie strategists outlined that, within the U.S., refiners want heavier, bitter barrels “to stability the crude slate” as a lot of the home provide is mild and candy.
“Due to this fact, the U.S. depends on heavy, bitter crude imports from the Center East, Mexico, and South America to maximise the utilization of the refineries,” the analysts mentioned.
“The extendable and reviewable a million barrel per day voluntary reduce by Saudi for July has the potential to shrink … bitter reductions and compress … refinery margins additional,” they added.
The strategists additionally highlighted within the report that macro considerations related to the affect of recessionary pressures on demand are probably limiting the flexibility for OPEC+ intervention to assist worth.
“Demand is a key a part of the stability that has probably the most uncertainty, with the market specializing in Chinese language demand development,” the analysts mentioned within the report.
“At the moment, the IEA is attributing round 60 p.c of 2023 international demand development to China; in distinction we estimate China will contribute [around] 35 p.c,” they added.
WTI, Brent Web Size
WTI+Brent speculative web size fell by 37.3K contracts to 75.6K, with shorts rising by 37.2K whereas longs fell 0K, the Macquarie strategists identified within the report.
Managed Cash web positioning decreased by 30.4K to 243K, with shorts rising by 22.5K contracts whereas longs decreased 7.9K, and Brent MM + Different web quick decreased by 10.1K contracts to -158.1 Ok, with shorts reducing by 5.9K whereas longs elevated 4.3K, the analysts revealed.
Brent Managed Cash web size grew by 20K contracts to 154.5K, with shorts falling by 12K whereas longs grew 7.9K, and Brent Different web quick grew by 9.8K contracts to -312.6K, with shorts rising by 6.2K whereas longs fell 3.7K, the analysts highlighted.
In one other report despatched to Rigzone this week, analysts at Normal Chartered famous that hedge funds and Commodity Buying and selling Advisors moved additional to the quick aspect in crude oil within the construct as much as the June 4 OPEC+ assembly, “transferring even past the intense reached two weeks in the past”.
“Our crude oil money-manager positioning index fell -10.9 week on week to -100.0; the -100 studying signifies that the money-manager web lengthy as a share of open curiosity is at its lowest for not less than 5 years (it’s actually at its lowest since 2009),” the Normal Chartered analysts said within the report.
“Complete money-manager shorts throughout the 4 primary Brent and WTI futures contracts rose by 20.4 million barrels week on week to 221.4 million barrels, whereas longs fell by 12.9 million barrels to 424.8 million barrels,” they added.
“Our gasoil positioning index fell 10.9 week on week to -84.9, whereas gasoline stays the one power contract with a constructive positioning index with the index rising 5.6 week on week to +15.5,” the analysts went on to state.
To contact the creator, e mail firstname.lastname@example.org