- StoneX: Ukraine’s recent attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost U.S. crude prices by $3/bbl.
- Standard Chartered: energy markets kicked off the new year with an overly pessimistic view of oil demand.
- Standard Chartered: global demand will hit a new all-time high of 103.01 mb/d in May.
Crude oil futures have rallied close to a five-month high with concerns about tightening supplies driving up prices in recent days, only coming down to earth on Wednesday and paring some of those gains while awaiting an interest rate signal from the U.S. Federal Reserve. According to StoneX energy analyst Alex Hodes, Ukraine’s recent attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost U.S. crude prices by $3/bbl. Analysts at J.P. Morgan estimates that 900K barrels of Russian refinery capacity have gone offline after the attacks, adding a risk premium of $4/bbl to oil prices. Brent futures have extended their year-to-date gain to nearly $10 per barrel. That figure is 0.25 mb/d higher than StanChart’s latest forecast, a development that has prompted the analysts to revise their 2024 demand growth forecast to 1.69 mb/d from 1.64 mb/d previously. The analysts have also predicted we are going to see a sustained period of inventory draws in H1-2024, with the cumulative draw during the first half of the year coming in at 185 mb compared with a H1-2023 build of 230 mb. StanChart says demand indications remain robust, and have predicted that global demand will hit a new all-time high of 103.01 mb/d in May, a record which will be broken in June and again in August when demand is expected to clock in at 103.62 mb/d and 104.31 mb/d, respectively. StanChart has predicted that tightening oil markets will continue to power the oil price rally and has reiterated its long-held forecast for Brent to average $94/bbl in Q2-2024.
StanChart has predicted that oil markets will continue to be supply-constrained for the better part of the year. The analysts see limited growth for U.S. crude production, with U.S. supply not likely to move significantly higher than November 2023’s all-time high of 13.319 mb/d. Meanwhile, Russia will continue to struggle to optimize its upstream and downstream oil system, with logistical constraints due to war damage as well as a lack of critical spare parts contributing to a negative outlook for Russian crude and refined products output. More importantly, StanChart sees OPEC+ having ample room to maneuver starting in the third quarter. The analysts have pointed out that a 0.9 mb/d increase in OPEC output in the third quarter would still lead to an inventory draw of 0.5 mb/d for the quarter on top of the 1 mb/d draw across H1-2024. Indeed, OPEC has room to increase Q3 output by as much as 1.5 mb/d Q/Q without increasing inventories. The Energy Information Administration (EIA) is the most bearish of the leading energy agencies; however, using its model, OPEC could increase output by 0.8 mb/d Q/Q without triggering an inventory build. StanChart notes that Q3 crude balances are such that OPEC could significantly increase crude output without depressing prices or negatively affecting inventories.