In a report sent late Tuesday by Standard Chartered Bank Commodities Research Head Paul Horsnell, analysts at the company, including Horsnell, said global oil demand reached an all-time high in June. “The release of Joint Oil Data Initiative (JODI) data on 19 August has, together with a variety of national sources, allowed us to make a first calculation of actual global oil demand in June; we put demand at 103.01 million barrels per day,” the analysts stated in the report. “Following JODI revisions, we now estimate May demand at 102.68 million barrels per day, the second-highest monthly average after June,” they added. “Year on year demand growth was 788,000 barrels per day in June, a deceleration from 1.267 million barrels per day in May and 2.129 million barrels per day in April,” they continued. The analysts noted in the report that average growth was 1.521 million barrels per day year on year in the second quarter of 2024, which they pointed out was close to their forecast for 2024 full-year growth. “We expect demand to remain above 103 million barrels per day for the rest of 2024, before falling seasonally to 101.9 million barrels per day in January,” the analysts added. “We calculate that global supply increased 160,000 barrels per day month on month to 102.097 million barrels per day in June, still well below December 2023’s all-time high of 103.162 million barrels per day,” they said. In the report, the Standard Chartered analysts warned that, “while the global numbers appear bullish, market dynamics have remained extremely bearish”.
“The key support for Brent is the 5 August low of $75.05 per barrel; below that level we would expect a period of relatively chaotic and algorithmic-dominated trading given the high degree of dislocation from fundamental influences,” they warned.
“However, in terms of pure global supply and demand dynamics, we see little justification for a sustained period of trading below $80 per barrel,” the analysts highlighted. The Standard Chartered analysts stated in the report that the latest slide in prices has been ascribed in much media and analyst commentary to a reduction in the geopolitical risk premium, consequent on progress towards a bridging agreement that might allow a ceasefire in Gaza to be discussed further. They said in the report, however, that they are unconvinced by that explanation. “We do not subscribe to the concept of a geopolitical risk premium, but even if it was a useful way of analyzing markets, a reduction in the premium would be associated with the closing out of long positions,” they added. “What we have observed over the past week has primarily been an opening of new short positions,” they continued.