ICE Brent surged above US$85/bbl while NYMEX WTI rose over US$81/bbl yesterday for the first time this year, as the IEA flipped its supply surplus estimates to a deficit in 2024 assuming that OPEC+ continues to trim output over the second half of the year. Meanwhile, continued tensions between Russia and Ukraine also added to the risk premium for oil.
In its latest monthly oil market report, the IEA made some upward revisions to its demand growth forecasts while lowering global supply estimates on output cuts from OPEC+ in 2024. The IEA now estimates global oil demand to increase by 1.3MMbbls/d in 2024 to 103.2MMbbls/d, up by around 0.11MMbbls/d compared to its previous estimates. On the supply side, the IEA estimates global supply to increase by 0.8MMbbls/d this year to 102.9MMbbls/d, including a downward adjustment to OPEC+ output. As per recent estimates, the oil market could encounter a supply deficit of 0.3MMbbls/d in 2024, compared to an earlier estimate of 0.8MMbbls/d of surplus.
The latest data from Insights Global shows that refined product inventories in the ARA region decreased by 30kt over the last week to 6mt. The decline was predominantly driven by fuel oil stocks falling by 132kt for a fifth consecutive week to 1.51mt. Meanwhile, weekly gasoline stocks saw a marginal decline of 2kt over the reporting week to 1.23mt. However, gasoil stocks in the region rose by 74kt to 2.11mt over the last week.
Elsewhere, data from Singapore showed that total refined products inventory in the country rose by 4MMbbls (+9% week-on-week) to 47.98MMbbls, the highest since the week ending on 12 April 2023. The decline was led by middle-distillate with inventories rising by 0.8MMbbls (+8% WoW) to 10.8MMbbls/d for the week ending on 13 March 2024, reaching its highest level since the week ending on 22 September 2021. Meanwhile, inventories for residual fuel and light distillate also rose 11% WoW and 7% WoW, respectively.
For natural gas, the EIA reported an inventory withdrawal of 9Bcf for the last week, higher than the market expectations of around 3Bcf withdrawals. However, the pace of inventory withdrawal remains quite below the five-year average fall of 87Bcf, primarily due to warmer-than-normal temperatures over most of the US and sufficient supplies. Natural gas inventories are up almost 17% from the same period last year, while also remaining 37% higher than the five-year average for this time of the year. However, recent weather reports suggest that it might get colder next week in the US, which might provide some support to the suppressed gas prices.
