June 5, 2017
- We continue to see lower supply of crude oil on the physical market for weeks #23-25. This is likely to provide support to the price.
- Our CU% of Inventory capacity is now indicating price-positive pressure. This comes on the back of lower than expected inventory accumulation across major oil consuming regions.
- Return on storage remains negative which we consider to be a price supportive development.
- Refinery margins have deteriorated which clashes with the amount of refining capacity off-line we have on record.
- We see the idle refining capacity running low for this time of the year and in line with the same period last year.
- Spot demand remains strong and we expect it to get even stronger during weeks #23-24.
- Our macroeconomic view remains deeply bearish which is our main concern.
- Currency Impact Index remains in strongly bearish mode for the 7th week in a row (see chart below). Oil has clearly not benefited from the US$ weakness in April and May and our currency indicator caught the downward pressure well.
- The rest of the variables which form our macroeconomic view are also bearish e.g. price-negative which is likely to affect the medium-term demand for crude oil.