24 May 2019
- Nothing has changed in our supply-side view for crude oil since our last publication on 10th May. We continue to believe that there are signs to suggest we are entering a period of looser global oil supply. The combination of a renewed pick up in inventory, abnormally low imports and stubbornly high US exports, as well as an anticipated spike in Russian exports during weeks #27-28, are key parts of our argument.
- Our short-term demand assessment has finally turned bearish. Our metric for Implied forward demand spiked during weeks #14-19. The prospects for the next 10 weeks are unambiguous. Another concern is the deterioration of refinery margins which is already having an impact on the amount of idle refining capacity.
- Our short-term macroeconomic view remains bearish. Much to our surprise the bearishness in our proprietary Currency Impact Index from early May dissipated quickly. This particular model variable is now firmly bullish. However, the other, more powerful macro forces appear to be in play at the moment.