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Commodity analysts at Standard Chartered are saying that positive speculative sentiment in the oil markets can support prices above $90/bbl. After an initial dip, the oil price rally has been a steady grind upwards in the current year, with the last 12 trading days seeing 10 days of higher intraday highs and 11 days of higher intraday lows.
According to the experts, their proprietary crude oil money-manager positioning index increased by 23.2 w/w to -39.6, the largest w/w improvement since the price lows of April 2020. StanChart says that improving sentiment can be chalked up to trader consensus becoming less concerned about OECD recession and more convinced that the oil markets will see significant demand growth, from China and India in particular. The analysts say that the rally is likely to take Brent prices past $90/bbl, though they are not optimistic that the fundamentals are strong enough to sustain prices above USD 100/bbl.Other market indicators have mostly been positive. Implied demand for total oil products increased by 2.687 million barrels per day (mb/d) w/w, the largest weekly rise in demand since December 2021. The big jump in demand came hot on the heels of weeks of depressed demand. Implied gasoline demand increased by 496 thousand barrels per day (kb/d) w/w; distillates by 203kb/d and jet fuel by 91kb/d. Total US refinery runs increased by 0.202mb/d w/w to 14.853mb/d but remain 1.4mb/d lower than the five-year average.
However, crude oil stocks rose to an 18-month high of 448.02mb, rising by 9.85mb against the five-year average and 8.41mb in absolute terms. The cumulative increase in crude oil inventories over the past two weeks is 27.37mb, 12.3mb above the five-year average. Crude stocks at Cushing, Oklahoma increased by 3.646mb w/w; the largest weekly increase since April 2020, as refinery turnaround season continues. Perhaps the best news for long-term investors is that oil demand is unlikely to taper off any time soon.
Source: Oilprice
