IEA Revises Forecast, Increases Demand Projections

Yesterday, crude prices fell from a DOE-induced rally to end the day in the red.  After the DOE released its weekly stats, the market rallied on positive crude inventory trends, only to give back those gains in afternoon trading.

Markets are higher this morning on news that the IEA lowered its forecast for global crude stockpiles in the second half of the year.  The IEA also estimates supply cuts in May totaling 12 MMbpd compared to April, bringing global production to the lowest level in 9 years. Given weak oil prices, 2020 year-end US production is forecast to fall 2.8 MMbpd year-over-year.  Regarding demand, the Q2 demand forecast increased a noteworthy 3.2 MMbpd to 79.3 MMbpd, though that’s still a huge break from global demand which surpassed 100 MMbpd in recent years. Full-year 2020 demand is projected to be 8.6 MMbpd below 2019, compared to last month’s reported 9.3 MMbpd deficit.

The EIA reported a smaller-than-expected rise for crude of 0.7 MMbbls, versus an expected increase of 4.4 MMbbls.  At Cushing, the EIA reported that stocks fell by 3.0 MMbbls. Diesel inventories reported another large build, bringing inventories to 16% above the five-year seasonal average. Almost all that build was in PADD 1B Central Atlantic, which saw a 3.7 MMbbls increase.  Refinery utilization was up by 2% nationally yet remains an extremely low 47% in PADD 1 where the build occurred.  The build was partially the result of above-average diesel imports into NY Harbor, which accounts for about a quarter of the build.  Gasoline reported a larger-than-expected inventory draw.  Gasoline inventories are about 9% above the five-year average for this time of year.

WTI Crude is trading higher this morning at $25.94, a gain of 65 cents.

Fuel is up in early trading this morning.  Diesel is trading at $0.8500, a gain of 1.9 cents.  Gasoline is trading at $0.8733, an increase of 2.1 cents.

Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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