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U.S. crude oil costs rose marginally on Tuesday, because the U.S. Power Info Administration raised its world oil demand progress forecast for 2024 whereas OPEC maintained its outlook for comparatively robust progress this yr.
In its newest Brief-Time period Power Outlook, the U.S. Power Info Administration raised its forecast for 2024 world oil demand progress to 1.1M bbl/day from its earlier estimate for a 900K bbl/day enhance, whereas decreasing its 2024 estimates for benchmark crude costs by ~4%.
The EIA stated it sees spot Brent averaging $84.15/bbl in 2024, down from its earlier forecast of $87.79/bbl, and WTI averaging $79.70/bbl, vs. its earlier view of $83.05, nevertheless it forecast Brent rising to $85/bbl on this yr’s H2, as OPEC+ extends voluntary manufacturing cuts by Q3.
“Though crude oil costs initially fell following the OPEC+ announcement, we anticipate the extension of all voluntary cuts by 3Q24 will trigger world oil inventories to proceed falling by 1Q25 and put upward stress on oil costs over that interval,” the EIA stated in its report.
In the meantime, OPEC+ stated in its month-to-month report that continues to forecast oil progress demand this yr at 2.2M bbl/day and subsequent yr at 1.8M bbl/day, unchanged from final month’s outlook, with non-OPEC+ provide seen rising by 1.2M bbl/day in 2024 and 1.1M bbl/day in 2025, each the identical as estimated in Might.
Entrance-month Nymex crude (CL1:COM) for July supply closed +0.2% to $77.90/bbl, and front-month August Brent crude (CO1:COM) closed +0.3% to $81.92/bbl.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)
Morgan Stanley analysts stated they anticipate Brent crude costs will rise by ~$5/bbl this summer season however warned {that a} development towards tightening provide within the subsequent three months will give technique to surpluses towards year-end 2024 and into 2025.
As soon as Q3 ends, the financial institution sees seasonal tailwinds turning into seasonal headwinds, noting refined product demand tends to drop by a median 3.9M bbl/day within the September-through-January interval, making for a tough surroundings to rally.
Morgan Stanley’s pricing deck for Brent crude signifies $86/bbl in Q3, easing to $85/bbl in This fall earlier than sliding to $81/bbl initially of 2025 and $76 by the top of subsequent yr.
With out additional motion by OPEC+, Morgan Stanley analysts consider 2025 will see a “persistent” surplus.
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