In a report despatched to Rigzone late Tuesday by Normal Chartered Financial institution Commodities Analysis Head Paul Horsnell, analysts on the firm, together with Horsnell, mentioned international oil demand reached an all-time excessive in June.
“The discharge of Joint Oil Knowledge Initiative (JODI) knowledge on 19 August has, along with a wide range of nationwide sources, allowed us to make a primary calculation of precise international oil demand in June; we put demand at 103.01 million barrels per day,” the analysts acknowledged within the report.
“Following JODI revisions, we now estimate Might demand at 102.68 million barrels per day, the second-highest month-to-month common after June,” they added.
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“Yr on yr demand progress was 788,000 barrels per day in June, a deceleration from 1.267 million barrels per day in Might and a couple of.129 million barrels per day in April,” they continued.
The analysts famous within the report that common progress was 1.521 million barrels per day yr on yr within the second quarter of 2024, which they identified was near their forecast for 2024 full-year progress.
“We count on demand to stay above 103 million barrels per day for the remainder of 2024, earlier than falling seasonally to 101.9 million barrels per day in January,” the analysts added.
“We calculate that international provide elevated 160,000 barrels per day month on month to 102.097 million barrels per day in June, nonetheless properly beneath December 2023’s all-time excessive of 103.162 million barrels per day,” they mentioned.
Extraordinarily Bearish Market Dynamics
Within the report, the Normal Chartered analysts warned that, “whereas the worldwide numbers seem bullish, market dynamics have remained extraordinarily bearish”.
“Entrance-month Brent fell $4.64 per barrel week on week to settle at $77.66 per barrel on 19 August, earlier than slipping to a low of $76.55 per barrel intra-day on 20 August,” they famous.
“Entrance-month 30-day realized annualized Brent volatility rose 1.9 proportion factors week on week to a seven-month excessive of 29.6 %,” they added.
“The important thing help for Brent is the 5 August low of $75.05 per barrel; beneath that degree we might count on a interval of comparatively chaotic and algorithmic-dominated buying and selling given the excessive diploma of dislocation from basic influences,” they warned.
“Nevertheless, by way of pure international provide and demand dynamics, we see little justification for a sustained interval of buying and selling beneath $80 per barrel,” the analysts highlighted.
The Normal Chartered analysts acknowledged within the report that the most recent slide in costs has been ascribed in a lot media and analyst commentary to a discount within the geopolitical threat premium, consequent on progress in the direction of a bridging settlement which may enable a ceasefire in Gaza to be mentioned additional.
They mentioned within the report, nonetheless, that they’re unconvinced by that clarification.
“We don’t subscribe to the idea of a geopolitical threat premium, however even when it was a helpful approach of analyzing markets, a discount within the premium can be related to the closing out of lengthy positions,” they added.
“What we have now noticed over the previous week has primarily been a gap of latest brief positions,” they continued.
Poor Type Persevering with
In a Rystad Power oil macro replace despatched to Rigzone by the Rystad crew on Tuesday, Rystad Senior Analyst Svetlana Tretyakova mentioned, “the oil market’s current poor type is constant this week as a ceasefire in Gaza grows extra possible and China demand weak point exhibits little signal of restoration”.
“Regardless of ongoing ceasefire negotiations, clashes between Israel and Hamas proceed, and the markets will stay extremely delicate to any developments within the area,” Tretyakova added.
“If the market fundamentals don’t break this bearish pattern quickly, OPEC+ could also be hesitant to unwind their voluntary cuts anytime quickly,” the analyst continued.
The replace highlighted that U.S. Secretary of State Antony Blinken was in Israel “pushing for a ceasefire and hostage launch, with additional negotiations in Cairo this week”.
Blinken has urged Israel and Hamas to grab what stands out as the final likelihood for a ceasefire and hostage deal, the replace acknowledged, warning that the state of affairs stays tense with ongoing violence and skepticism about reaching an settlement.
“Blinken’s go to additionally comes amid stress on President Biden’s stance on the battle, which might have an effect on democratic occasion help in key U.S. states within the upcoming elections,” the replace mentioned.
Taking a look at China, the replace acknowledged that weak demand and commerce tensions are straining the financial system and famous that current stimulus measures have been inadequate to show their fortunes round.
“Inflation is predicted to stay low, contributing to lowered international oil demand forecasts by the IEA and OPEC,” the replace mentioned.
“Macroeconomic knowledge launched in July exhibits China’s client costs elevated by 0.5 % yr on yr, pushed by greater meals prices, whereas core inflation rose 0.4 %. Producer costs fell 0.8 %,” it added.
To contact the writer, e-mail andreas.exarheas@rigzone.com
