8 January 2018
- Increase in supply of crude oil on the spot market is evident. Considered on its own (never the case), this represents an outright bearish price development. The situation is further exacerbated by the cycle of de-stocking. More oil may appear on the market independent from the output targets of many producers. Pressure to de-stock is also evident from the deeply negative cash and carry arbitrage.
- Demand remains firm which is an important price supportive development. The strong macroeconomic performance in Q3 and Q4 filtered through and materialized as downstream demand. We still expect that conditions have to change immediately on the back of seasonal and business cycle trends.
- Our macroeconomic view has improved due to the recovery indicated by our Global Energy Intensity model. We remain hesitant on the prospects of Q1 2018 but we continue to lean towards a mildly bearish macro environment on the back of an anticipated slowdown in credit and a seasonal decline in the manufacturing activity for key oil-consuming regions.