From May through July the OECD crude stocks decreased sharply in the wake of OPEC-plus’s decision to extend its production cuts in a complex deal. OPEC-plus members dilemma with lower crude prices than meets their target to balance their budget and the loss of market share keeps looming over the group of oil producers. The plan is to increase output with releasing the voluntary cuts gradually by about 180 000 bpd monthly starting December. This to regain lost market share without upsetting an unstable oil price.
According to market data the OECD commercial crude stocks came in about 1.035 billion barrels in September. After the sharp decline in May, June and July with a monthly draw of approximately 20 million barrels of stocks, the draw slowed in the following months of August and September to roughly 6 million barrels for August and flat in September according to recent data.
With the OECD inventories declining in the last months, the non-OECD commercial inventories have gained approximately 75 million barrels since April. The main driver behind the increase in non-OECD inventories is China, who added roughly 86 million barrels, while the rest of non-OECD countries saw a draw of about 11 million barrels.
From May through July the OECD crude stocks decreased sharply in the wake of OPEC-plus’s decision to extend its production cuts in a complex deal. OPEC-plus members dilemma with lower crude prices than meets their target to balance their budget and the loss of market share keeps looming over the group of oil producers. The plan is to increase output with releasing the voluntary cuts gradually by about 180 000 bpd monthly starting December. This to regain lost market share without upsetting an unstable oil price.
According to market data the OECD commercial crude stocks came in about 1.035 billion barrels in September. After the sharp decline in May, June and July with a monthly draw of approximately 20 million barrels of stocks, the draw slowed in the following months of August and September to roughly 6 million barrels for August and flat in September according to recent data.
With the OECD inventories declining in the last months, the non-OECD commercial inventories have gained approximately 75 million barrels since April. The main driver behind the increase in non-OECD inventories is China, who added roughly 86 million barrels, while the rest of non-OECD countries saw a draw of about 11 million barrels.
China, the world’s largest crude importer and the global demand engine has imported on average 11 million bpd year to date, slightly down from last year’s average of 11.3 million bpd. Keep in mind Chinese lack of transparency, making it hard for analysts to be 100 percent accurate. With the geopolitical risk premium easing Chinese stimulus has fail to support crude oil prices, and benchmark crude prices seems to be stuck in a wait and see mode still.
The International Monetary Fund (IMF) has cut its growth projections for Saudi Arabia’s economy. This is the second cut in three months the IMF lowers growth outlook for the kingdom. The main cause behind the lower growth outlook is a result of the extension of oil output from the OPEC+ group.
The IMF shaved 0.2 percent of the Saudi GDP growth forecast for 2024 and by 0.1 percent for 2025.
In an attempt to support the supply and demand balance OPEC+ has kept roughly 5.9 million bpd of the market or approximately 5.7 percent of global demand, and Saudi production is carrying its fair share of the cuts. In 2023 Saudi production averaged 9.5 million bpd, down 1 million bpd on average from 2022. Year to date production data from Riyadh shows further decline in production levels from 2023 with 2024 average at 8.9 million bpd.
Brent crude future contracts still in backwardation, signaling a tightening of the market in the future.
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DisclaimerThis report is under no circumstances intended to be used for or considered as investment advice. This report is to be used as information and a general market guidance. The author, GE Briefings and Investornytt cannot guarantee that the information from sources is without incentives, but the author has taken considerable care to ensure that, and to the best of his knowledge, material information contained in the report is in accordance with the facts and contains no omission likely to affect its understanding. Please note that this report is the authors own research, opinions and conclusions, and the readers is recommended to draw their own conclusions based on other sources than this report, the facts and market picture can change in an instant and therefor the reader must do their own due diligence. With lack of transparency with China data errors can occur within the data GE Briefings has compiled The author, GE Briefings and Investornytt cannot be held responsible for the readers investments based on this report.
