Standard Chartered Analysts Think Oil Could Make Rapid Move Towards $90

by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas

Standard Chartered Bank analysts, including Commodities Research Head Paul Horsnell, think oil prices “could make a relatively rapid move higher towards $90 per barrel”, a new report sent to Rigzone by Horsnell revealed.

The move would be “helped by the tailwinds of further speculative short-covering, some precautionary consumer hedging, and a likely improvement in the strength of high-frequency U.S. oil data,” the analysts outlined in the report.

In the report, the analysts noted that oil prices “have continued their post-OPEC+ recovery, with 13 June the only trading day in the past nine that has not seen a higher intra-day low and a higher intra-day high”.

The analysts highlighted in the report that Standard Chartered’s machine learning oil price model indicates a June 24 Brent oil price settlement of $84 per barrel, “with technical indicators the main drag on prices (the 50-day,100-day and 200-day Brent moving-averages are all close to $84 per barrel)”.

Standard Chartered projected in the report that the nearby future ICE Brent crude oil price will average $98 per barrel in the third quarter and $106 per barrel in the fourth quarter.

In the report, Standard Chartered analysts said global oil demand surprised them to the upside in April.

“The release of Joint Organization Data Initiative (JODI) monthly data on 17 June, together with a variety of national sources, allows us to calculate our first estimate of actual April demand,” they said in the report.

“We put demand at 101.77 million barrels per day, which is 470,000 barrels per day higher than the forecast embedded in our latest published balances,” they added.

The analysts highlighted in the report that they had previously forecast that global oil demand would reach a new all-time record in May and surpass that record in June.

“We reiterate that forecast, with our May demand projection revised 0.2 million barrels per day higher to 103.3 million barrels per day since our earlier report and our June projection revised 0.3 million barrels per day higher to 104.1 million barrels per day,” they said.

“Year on year growth in global oil demand in April was 2.346 million barrels per day; this is the second-highest growth rate in the past six months, surpassed only by January 2024, and 280,000 barrels per day higher than 2023’s annual growth,” they continued.

The analysts noted in the report that growth was significantly weaker in March.

“We estimate year on year growth of 760,000 barrels per day, while the Energy Information Administration estimate is growth of 400,000 barrels per day and the International Energy Agency (IEA) indicates a year on year decline of 165,000 barrels per day,” they said.

“Given the strong improvement from March, we think the April numbers represent an important break from the highly bearish demand narrative and associated weak sentiment that has dominated oil markets over the past couple of months,” the analysts went on to state.

In an oil market update sent to Rigzone from the Rystad Energy team on Monday, Rystad Vice President and Global Lead of Crude Trading Analysis, Patricio Valdivieso, said, “oil prices have bounced back this week and are experiencing their best performance since early April”.

“Brent crude futures have recovered after dropping to nearly $82.0 per barrel. Concerns over weak oil demand are driving market volatility and mixed data from China add to the uncertainty,” he added.

Valdivieso noted in the update that there seems to be an excessive focus on the demand side of fundamentals.

A research note sent to Rigzone by the J.P. Morgan Commodities Research team late Monday stated that “the estimated value of open interest across energy markets increased by $26 billion week on week (plus four percent week on week)”.

“The increase in crude oil and petroleum products was driven by both a healthy $6 billion week on week of inflows and positive price action across the curve,” the note added.

“Our oil strategists now see total liquids production in the U.S. exceeding 20 million barrels per day in 2024 and 2025 (+762 /+745,000 barrels per day in 2024/25),” it continued.

by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas