25 June 2019
- Little has changed in our supply-side view for crude oil since our last publications in May and June. There are still plenty of signs to suggest that we are in a period of looser global oil supply. The combination of a renewed pick up in inventory, abnormally low imports and stubbornly high US production and exports, as well as an anticipated spike in Russian exports during weeks #27, are key parts of our argument.
- Our short-term demand assessment has improved further. The positive change can be explained by the improved profitability of refineries and subsequent increase in their capacity utilization. The result is decent uptick in demand for this time of the year. Our forward demand view is less encouraging but even here we notice some improvement – see the projected increase from a very low base during weeks #27-30. We remain of the opinion that the uptick in demand can be at least partially attributed to the +20% collapse in the oil prices back in May.
- Our short-term macroeconomic view remains bearish. Signals from the FX markets have not been price supportive for 5 consecutive weeks. The latest reading of our proprietary FX Impact Model is displayed below. It still points to further losses for the oil market in the second half of June. On the bright side, we would like to mention the increase in Energy Intensity for key oil consuming regions. There is evidence to suggest that the cautious economic