Standard Chartered economists: OPEC+ cuts will eventually eliminate the surplus that had built up in the global oil markets at the beginning of the year.
on the oil price outlook compared to previous sentiment. Now it turns out that these economists are turning more bullish even as the overall market becomes more bearish.May, about a week after similar reports were released by the Energy Information Administration and OPEC Secretariat. Commodity experts at Standard Chartered have created a heatmap of demand forecast changes, including their own, in the latest reports relative to one and three months ago.
According to the International Energy Agency, global oil consumption remains on track to rise by 2M bbl/day this year to an all-time high 101.9M bbl/day. Inventories are gradually tightening and should deplete further as OPEC+ implements new production cuts. Crude oil inventories have fallen below the five-year average for the first time this year. Last week, implied gasoline demand rose by 992 thousand barrels per day w/w to a 15-month high of 9.511mb/d.
StanChart has predicted that the OPEC+ cuts will eventually eliminate the surplus that had built up in the global oil markets at the beginning of the year. According to the analysts, a large oil surplus started building in late 2022 and spilled over into the first quarter of the current year. The analysts estimate that current oil inventories are 200 million barrels higher than at the start of 2022 and a good 268 million barrels higher than the June 2022 minimum.
However, they are now optimistic that the build over the past two quarters will be gone by November if cuts are maintained all year. In a slightly less bullish scenario, the same will be achieved by the end of the year if the current cuts are reversed around October. This should shore up prices. Meanwhile, natural gas prices are expected to increase in the latter half of the year as Europe goes on yet another buying spree.
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